Performance standards are a valid idea—if targets are achievable.
Performance standards are a valid and necessary idea to drive conservation, but only if targets are realistic and achievable. So far, success has been determined by program rationality. A uniform, market-based approach would give retailers flexibility to spur innovation.
Growing gas storage depends on fair regulatory treatment.
FERC’s final rule authorizing new natural gas storage facilities seems to presume market power for pipelines and new storage. FERC should consider changing that presumption to more accurately reflect Congress’s intent in EPAct 2005.
A solution to high electricity prices in restructured states.
New baseload generation is needed in many areas of the United States, but financing new plants will be particularly challenging in restructured states where generation facilities are no longer included in rate base and therefore not financed through the traditional rate-of-return paradigm. A market hybrid approach—in which new baseload plants would be partially owned and financed by the regulated distribution company with the other portion owned and financed by the unregulated generation company—would combine the advantages of lower cost capital and regulatory oversight associated with traditional rate of return regulation, with the cost control and efficiency associated with competitive markets.
FERC owns more than one enforcement tool. Besides civil penalties, it can require compliance plans or disgorgement of unjust profits, or condition, suspend, or revoke market-based rate authority, NGA certificate authority, or NGA blanket certificate authority. And lacking criminal penalty authority itself, FERC can refer matters to the U.S. Department of Justice for criminal prosecution. Moreover, while defining an organization as any entity other than a natural person, FERC nevertheless will continue to determine civil penalties for natural person violators, looking to the guidelines for guidance in setting such penalties.
Bringing fairness to FERC enforcement.
FERC’s proposed penalty guidelines provide the opportunity for improved regulation. More practical and consistent characteristics for determining penalty fine ranges will increase penalty predictability for industry violations of federal regulations—and will make FERC’s enforcement more fair and transparent.
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.
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?
Mitigating enforcement penalties in NERC hearings and appeals.
The North American Electric Reliability Corp. (NERC) holds substantial enforcement powers as the nation’s electric reliability organization for bulk power transactions. Taking affirmative steps will help utilities and system operators to avoid or minimize NERC penalties.
Successes, shortcomings and unfinished business.
A rebuttal to conclusions made in three Fortnightly articles that service quality declined in Ontario because of a performance-based regulation plan implementation.
Service quality suffers under PBR framework.
Building upon last month’s installment, more is revealed on how, after 10 years of incentive regulation, reliability has declined in Ontario.