And how the market has outmaneuvered the political forces, so far.
Why net energy metering is unfair and inefficient.
The coming cash flow and dividend stress at America’s electric utilities.
Government policies and the industry’s response has increased the risk factors affecting the quality of earnings at U.S. electric utilities. Deferred taxes and ballooning pension obligations portend leaner operating cash flow in the years ahead. Regulators and utilities will be forced to unwind these financial knots in future rate cases.
Recent years have seen fundamental changes in the supply and competitive landscape of the North American natural gas market. In response to high natural gas prices that prevailed during most of the last decade, gas producers in the lower 48 now have developed new sources of supply and technology, particularly to access new shale gas formations. These new supplies have encouraged a substantial expansion of the natural gas pipeline network in North America to allow the producers to reach end-use markets.
The debate about freeridership in energy efficiency isn’t wrong, but it is wrongheaded.
In any conservation or efficiency program, some market participants will reap benefits without paying their share of the costs—i.e., the “freerider” problem. Some freeriders are unavoidable and generally not a problem. But as Cadmus Group analysts Hossein Haeri and M. Sami Khawaja explain, avoiding excessive freeridership requires careful program structuring, as well as ongoing measurement to accurately evaluate outcomes.
Adding up the benefits of infrastructure investments.
Allocating the costs of new transmission investments requires accurately assessing the value of those new lines, and identifying the primary beneficiaries. But formulaic approaches rely too much on the most easily quantified cost savings, and reject benefits that are dispersed across service areas—or that might change over the course of time. Brattle Group analysts J.P. Pfeifenberger and D. Hou explain that comprehensive valuation produces a more accurate picture.
Case studies on integrating renewable resources.
Where wind integration has been most successful, state authorities developed and adopted basic transmission planning and cost allocation principles before FERC issued Order 1000. Experiences in Texas, California, and Hawaii demonstrate what it takes to overcome permitting and cost allocation barriers—namely, a coherent policy framework and close coordination among stakeholders.
Performance measurement and action steps for smart grid investments.
Regulators and customers are holding utilities’ feet to the fire, when it comes to investing in advanced metering and smart grid systems—and rightly so. Making the most of investments requires a systematic approach to establishing standards and monitoring performance. But it also requires policy frameworks and cost recovery regimes that provide the right incentives.
A strategic approach to mitigating rate increases and greenhouse gas price risk.
Experience in the Duke Energy Carolinas service territory shows that high penetration rates for electric vehicles, combined with increased natural gas-fired power generation, can result in lower costs to customers and lower risks for utility shareholders—while also reducing total emissions of greenhouse gases. However, these outcomes depend on policy changes that facilitate smart, off-peak vehicle charging, and that allow utilities to capture the benefits of a more environmentally friendly power system.
The consumer-centric smart grid and its challenge for regulators.
Federal and state regulators play a critical role in the evolution of the smart grid. Lawmakers face a host of questions, from deciding who owns consumer data and how it can be used, to defining a new range of regulated and unregulated utility services and applications. How much regulation will be needed to manage the transformation to a smart grid? And how much regulation will be too much?