Federal incentive payment of 1.8 cents/kWh for the generation of renewable energy—part of The Energy Policy Act of 2005—increases the economic attractiveness of many potential hydro sites,...
- partially can be addressed by the increased use of combined heat and power technologies. These technologies are becoming increasingly cost-effective as the nation's electricity consumers move toward generation technologies located on the customer's site.
- Similarly, waiting in the wings for market encouragement is a new wave of transmission and distribution capacity, essentially bringing the information and communication revolutions to our century-old industry structure. Integration of loads and sources, utilizing real-time pricing, or much improved proxies for real time, became an obvious need during the California crisis, when electricity customers were "protected" from the real prices. Unfortunately, now the state and its citizens will pay those real prices over decades to come.
- The nation's state and federal regulators and policy-makers need to reconsider the anti-competitive and anti-environment effects of many outdated utility regulatory practices. Specifically, the legacy revenue protection schemes-such as customer protection rates and economic development rates-must be eliminated, or at least scrutinized for clear public benefit in today's world. These rates should not stand if regulators cannot be assured that the public interest is being served.
- Regulators ultimately will need to deal with the difficult political issue of what to do about the considerations and tradeoffs that were routinely considered in least-cost planning and integrated resource planning proceedings. The demand responsive load initiatives in some RTO/ISO areas are a precursor to further exploration of approaches to asking many of the same fundamental questions of IRP-"What are the cost-effective options to doing more of the same that we have always done?"-whether at the level of a distribution utility or RTO/ISO.
- While it might also be argued that the real driver of the deregulation fervor for major industrial users was the combination of technological deregulation with the belief that integrated resource planning sometimes resulted in imposed energy costs that were not clearly energy costs, the continuing decline in the size of cost-effective self generation also will provide a kind of cost safety cap to the reintroduction of more systematic decision making.
Regulators and utilities worked well through the 20th century to build an admirable but increasingly flawed electricity system. One of the system's greatest flaws has been its inefficient-even wasteful-use of fuel resources in the face of opportunities to implement combined heat and power. As in other parts of the economy where inefficiencies have emerged, new technologies offer practical alternatives. These alternatives often allow greater efficiencies and lower costs than traditional central station, single-cycle generation solutions. The challenge now is for regulators to rethink and reinvent the regulatory paradigm to embrace these technologies. Doing so will help regulators recapture the notion of serving the public interest, and it will provide a won-derful opportunity for the United States to lead an important strike against unnecessary environmental effects.
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