Aligning State 111(d) Plans with Electricity Market Incentives
With the pending release of the United States Environmental Protection Agency’s final Clean Power Plan (CPP) rule, planning for compliance must begin in earnest. If viewed as an opportunity for positive change, the CPP can be a springboard for energy regulators to redefine their thinking on innovation, resource options, and future objectives. At a National Governors’ Association learning lab on new utility models with electricity market incentives, David Littell highlighted six options for aligning state 111(d) plans with complementary market mechanisms—regional renewable energy credit trading, energy efficiency resource standards, cap and trade mechanisms, carbon fees or taxes, feed-in tariffs, and power purchase agreements. He also explores best practices for decoupling, along with alternative forms of revenue regulation and complementary measures. Effective rate design can help states achieve approvable, least-cost compliance plans that ensure reliability, consumer protection, and provide equitable revenue for utilities.