The States

After ratepayers brought a class-action lawsuit against distribution utilities, Texas regulators commissioned a study of the state’s new smart meters. The study explains why customers reacted the way they did, and offers insights into how the industry can avoid a Texas-style backlash.

In effort to promote local green energy resources, some states are enacting policies that tread on federal authority. Restrictions on power imports to satisfy RPS requirements might violate the Commerce Clause of the U.S. Constitution. Can the states foster home-grown energy without running afoul of federal laws?

The California ISO is going its own way with its proposal for transmission planning, virtually ignoring FERC’s proposed rules on transmission planning and cost allocation. California wants to bring method to the madness of developing transmission projects, and its approach has raised hackles in the industry. The dispute defines the battle over America’s most attractive market for rate-regulated investment.

New federal and state policy mandates are pulling state regulators in many directions. The patchwork of regulations has created a new level of complexity for utility investment decisions and political risk for utilities and state regulators alike.

When Électricité de France stepped in to buy Constellation Energy’s nuclear assets and help the company avoid bankruptcy, the Maryland Public Service Commission conditioned the sale on a set of ring-fencing provisions. The industry has been using such structures to protect ratepayers in complex and high-risk M&A transactions since the 1990s. The protection isn’t foolproof, however—and it can bring problematic regulatory trade-offs.

California’s new feed-in tariff (FIT) is creating a burgeoning market for green energy investments, but the policy has sparked a fierce battle over state authority to dictate wholesale power transactions. A federal case will determine whether the 1978 Public Utility Regulatory Policies Act pre-empts states from requiring purchases that exceed utilities’ avoided cost.

(March 2010) New Day for Prudence: I am sending this letter at the request of Robert Gruber, who is the executive director of the Public Staff-North Carolina Utilities Commission (NCUC), which is the state agency charged with representing the public in matters before the NCUC. In the article, “New Day for Prudence,” the group that filed the quoted testimony is not “the Office of Public Counsel.” It consists of a number of non-profits and associations that banded together and called themselves the Public Advocacy Groups for the purpose of intervening before the NCUC. We’re also concerned because the article’s description of the NCUC’s ruling is erroneous.

The sweeping regulatory reform implemented in Michigan over the past year is often couched as a response to the economic crisis. Decoupling rates from utility profits, the reasoning goes, will remove disincentives to efficiency. Reducing the subsidies that commercial customers have long shouldered will ease their financial burdens. New renewable portfolio standards and wind generation initiatives will create green jobs and much-needed infrastructure.

Regulatory policies are evolving to make demand response and smart-grid planning a reality across the country. Cooperation between federal and state lawmakers will allow local flexibility within a uniform national framework.

States’ green energy policies are being used to serve multiple agendas. Lawmakers should revisit their renewable incentive programs to better align them with policy goals. A regional approach will yield a more efficient portfolio.