FIT in the USA

Constitutional questions about state-mandated renewable tariffs.

Despite state efforts to follow the European model of state-mandated feed-in tariffs to promote renewable power, these actions won’t pass Constitutional muster. The Supremacy Clause makes a formidable legal barrier.

Proving Smart-Grid Savings

Real-world projects show tangible returns.

Much is riding on successful smart-grid deployments. Experiences at several utilities demonstrate the costs and benefits of today’s automation technologies.

Business Case Tradeoffs

Shaping long-term smart-grid strategy.

Making the business case for the smart grid is an important utility goal. It provides the justification for making or deferring required investments. Utilities might find it necessary to engage in a cycle of continuous strategic planning.

Cap and Innovate

An alternative approach to climate regulation.

Low carbon prices might not produce sufficient incentives for firms to innovate and reduce emissions in the long run. But relatively high carbon prices can be politically unacceptable and invite consumer backlash. Where’s the right balance? A PUC chairman offers an alternative approach to managing GHG emissions.

Autopilot Error

Why similar U.S and Canadian risk profiles yield varied rate-making results.

Cost of capital is often a contentious issue in utility ratemaking. This is due, in part, to the inexact nature of the tools available to financial analysts and the considerable room for divergent opinions on key inputs to cost-of-capital estimation. Perhaps for this very reason, and to achieve regulatory efficiency, Canadian regulators widely adopted a formulaic approach to setting return on equity (ROE). However, an unusual degree of rancor has evolved north of the border as allowed ROEs in Canada, once at parity, have fallen near 200-basis points below their U.S. peers.

Reconsidering Resource Adequacy, Part 1

Has the one-day-in-10-years criterion outlived its usefulness?

The one-day-in-10-years criterion might have lost its usefulness in today’s energy markets. The criterion is highly conservative when used in calculating reserve margins for reliability. Can the industry continue justifying the high cost of overbuilding?

Two Hands Clapping

Has demand response hit an evolutionary dead end?

On March 18, the day after this issue went to press, FERC was scheduled at its decisional meeting to open a new formal inquiry on the role of demand response in regions that already have competitive wholesale power markets. In particular, how much money should grid operators pay to electric customers who promise not to buy wholesale power?

Integrating Renewables

Opportunity for advancement or exercise in futility?

The power grid has been slow to embrace renewable energy sources. In order to allow renewable energy sources to evolve into a solution rather than a headache, new tools and processes will need to be developed to forecast and control renewable production capabilities.

Regulation by Formula

Tools to facilitate changing utility economics.

These are challenging times for the electric and gas utilities. Reliability projects, renewable portfolio standards, greenhouse-gas emissions control, AMI, smart-grid investments, and conservation programs—all these things add to costs, but might bring in no additional revenue. Moreover, there will be unprecedented capital investment in transmission, renewable generation projects, and replacement of old facilities from the 1950s and 1960s. Thus, earnings likely will be more closely watched and traditional general rate cases might not be able to keep up.

Real Green Costs

Valuing risk reduction for renewables and DSM.

Resource planners are faced with complex choices for developing cost-effective and robust energy supply portfolios. These choices are complicated by uncertainties inherent in future fuel and emissions costs. In the summer of 2008, retail energy providers with supply primarily from wind generation had a substantial cost advantage over gas-fired generation. In the summer of 2009, though, gas prices plummeted in the wake of the recession. Reversing the previous trend, this shift causes wind generation to appear more costly relative to gas-fired generation.