Commission

As federal policy makers push for GHG regulation and transparent markets, the California experience shows what works and what doesn’t work.

In light of coming GHG legislation, price transparency is the key to achieving cleaner generation through the dispatch of lower-carbon sources.

When the applause dies down, the smart grid may turn out to be its own worst enemy. The California Independent System Operator (CAISO) explained this irony in comments it filed in May, after the FERC asked the industry for policy ideas on the smart grid.

Removal cost is the expenditure involved with physical removal or safe abandonment of an asset, and is not a trivial matter, because it is not unusual for such expenditures for long-lived property to exceed the related depreciable investment amounts. Various treatments of removal costs have various effects on utility ratepayers. Of all the approaches the industry uses, ratable treatment through depreciation minimizes the costs borne by ratepayers.

Given this dynamic state of evolution, it’s not surprising that next-generation technologies are undergoing their own difficult transitions. This transition is exemplified by four high-tech projects being executed by four electric utilities: Duke Energy, American Electric Power, Consolidated Edison and San Diego Gas & Electric. Their projects address different parts of the power-supply chain, and they’re taking different paths to secure financing and regulatory acceptance.

After 10 years of incentive regulation, reliability has declined in Ontario. Regulators failed to enforce service-quality standards, and consumers are suffering as a result.

When Congress repealed the Holding Company Act, it gave states greater authority to regulate utilities. New Jersey picked up the baton and enacted rules to protect ratepayers.

Who will oversee the industry’s cyber standards? Effective security calls for a single organization to set standards that will protect the smart grid. The industry is struggling to reach consensus over authority, scope and funding for its new security apparatus.

Congress hasn’t amended the Federal Power Act in any way that would change the status quo, and a bright line still separates the distribution business from the federally regulated bulk-power system. Pending legislation, however, might change that.

As energy issues take center stage in the policy debate, state attorneys general increasingly are using their political influence and legal authority to affect a wide range of areas—from greenhouse-gas emissions to siting and development of infrastructure projects. Working constructively with state AGs can help utilities avoid becoming targets of investigation and litigation.