The resources below are offered as part of our Complying with Environmental Regulations Knowledge Management Series. These provide an overview of regulatory principles, ratemaking practices, and strategies for addressing risk.
- Clean First: Aligning Power Sector Regulation with Environmental and Climate Goals: Clean First is not a single policy, but rather a comprehensive suite of policies that flows from the overarching principle of aligning national power sector policies and practices with national climate and environmental policies. RAP proposes that in regulatory decisions, clean resources should get every reasonable preference over resources that have greater environmental impact. This represents a fundamental shift in policymaking that we call “Clean First.” We offer a series of policy options that can be combined with carbon pricing approaches to deliver effective and low-cost carbon savings.
- Electrical Energy Security: Assessing Security Risks: Among the many issues facing utility regulators, there are two, often competing ones: What does it take to keep the lights on? And, what does it take to keep rates at a reasonable level? Ongoing changes in the electric industry have challenged the ability of regulators to adequately address these questions. Assuring that system security risks are understood and addressed only adds to the challenge. In this first of two IssuesLetters discussing security-related questions, we examine the nature of security risks to the nation’s electric infrastructure.
- Electrical Energy Security: Policies for a Resilient Network: Regulators and other public officials constantly assess and seek to develop resilience against natural and manmade assaults on the energy infrastructure, while balancing the enduring goals of utility management, including power system costs, reliability, and environmental impacts. In this IssuesLetter we highlight policies for regulators and utilities to improve the security of the nation’s power systems not by building fortresses around large, fragile facilities and trying to defend thousands of miles of long-distance transmission lines, but by strategically evolving a more resilient electric network.
- Electricity Regulation in the US: A Guide: The purpose of this guide is to provide a broad perspective on the universe of utility regulation. The paper first addresses why utilities are regulated, then provides an overview of the actors, procedures, and issues involved in regulation of the electricity and gas sectors. The guide assumes that the reader has no background in the regulatory arena, and serves as a primer for new entrants. It also provides a birds-eye view of the regulatory landscape, including current developments, and can therefore serve as a review tool and point of reference for those who are more experienced.
- Practicing Risk-Aware Electricity Regulation: What Every State Regulator Needs to Know: This report is addressed to state regulatory utility commissioners who will preside over some of the most important investments in the history of the U.S. electric power sector during perhaps its most challenging and tumultuous period. The report seeks to provide regulators with a thorough discussion of risk, and to suggest an approach—“risk-aware regulation”—whereby regulators can explicitly and proactively seek to identify, understand, and minimize the risks associated with electric utility resource investment. This approach is expected to result in the efficient deployment of capital, the continued financial health of utilities, and the confidence and satisfaction of the customers on whose behalf utilities invest.
- Profits and Progress Through Distributed Resources: The combination of advances in distributed resources and in control and information technologies means that distributed resources can play a central role if markets and regulators allow these resources to compete. This report explores the relationship between the use of distributed resources and utility profits, and describes the market environment where cost-effective distributed resources can compete with central station generation.
- Rate Design Where Advanced Metering Infrastructure Has Not Been Fully Deployed: This paper identifies sound practices in rate design applied around the globe using conventional metering technology. Rate design for most residential and small commercial customers (mass market consumers) is most often reflected in a simple monthly access charge and a per-kWh usage rate in one or more blocks and one or more seasons. A central theme across the practices highlighted in this paper is that of sending effective pricing signals through the usage-sensitive components of rates in a way that reflects the character of underlying long-run costs associated with production and usage. While new technology is enabling innovations in rate design that carry some promise of better capturing opportunities for more responsive load, the majority of the world’s electricity usage is expected to remain under conventional pricing at least through the end of the decade, and much longer in some areas. Experience to date has shown that the traditional approaches to rate design persist well after the enabling technology is in place that leads to change.
- Revenue Regulation and Decoupling: A Guide to Theory and Application: This guide was prepared to assist anyone who needs to understand both the mechanics of a regulatory tool known as decoupling and the policy issues associated with its use. We identify the underlying concepts and the implications of different rate design choices. This guide also includes a detailed case study that demonstrates the impacts of decoupling using different pricing structures (rate designs) and usage patterns.
- Time-Varying and Dynamic Rate Design: Time-varying and dynamic rates have the potential to avoid or defer resource costs, reduce wholesale market prices, improve fairness in retail pricing, reduce customer bills, facilitate the deployment of both distributed resources and end-use technologies, and reduce emissions. This report identifies rate design principles and the risk-reward tradeoffs for customers that must be considered in the design and deployment of time-varying rates. The term, time-varying rates, is used in this report as encompassing traditional time-of-use rates (such as time-of-day rates and seasonal rates), as well as newer dynamic pricing rates (such as critical peak pricing and real time pricing). The discussion is primarily focused on residential customers and small commercial customers who are collectively referred to as the mass market. The report also summarizes international experience with time-varying rate offerings.