Economic Experiments
Tony Clark served as a Commissioner on the Federal Energy Regulatory Commission from 2012-2016. He is a former Chairman of the North Dakota Public Service Commission and a former President of the National Association of Regulatory Utility Commissioners.
In my native Midwest, people spend a good deal of time discussing the weather. It dominates conversations with friends and strangers alike, because it so impacts everyday life.
Those of us who relocate to the Washington, D.C. region quickly realize that automobile traffic and daily commutes are the Washington versions of Midwest weather small-talk. Chatting about traffic conditions, potholes, work slow-downs, metro malfunctions and the nightmare of commuting is a staple of life for people residing near the Capital Beltway.
A recent traffic tempest on the Virginia side of the Potomac has caused me to ponder an issue that has long vexed electricity regulators at both FERC and the states; the matter of price responsive demand (PRD). Let me explain.
The Virginia Department of Transportation (VDOT) recently implemented a congestion pricing program on Interstate 66, one of the few main arteries carrying Virginia commuters to D.C.
High Occupancy Vehicles (HOV) may use the roadway for free during high volume times, and solo drivers have the opportunity to use the roadway for a toll, based on dynamic pricing. The more congested the road becomes, the higher the toll goes, incenting solo drivers to choose to abandon the road once their own personal price tolerance is exceeded.