Legal & Regulatory

A utility executive responsible for procuring renewable power recently lamented that, at the time of contract execution, renewable “projects” are typically at a very preliminary stage of development, offering scant information about project specifics. Regulatory or other objectives often cause the utility to require that the power purchase agreement be executed before critical permits have […]

This May, the Arizona Corporation Commission (ACC) rejected a proposal by Southern California Edison (SCE) to build Devers-Palo Verde No. 2 (DPV2)—a 230-mile-long, high-voltage transmission line connecting California and Arizona. The line, approved by the California Public Utilities Commission (CPUC) four months earlier, would enable SCE to import additional low-cost electricity from Arizona. The ACC’s rejection of DPV2 highlights a significant challenge for state and regional resource planners—weighing state interests against the regional benefits of interstate electricity commerce.

While elected officials in Washington debate the politics of climate change, state legislators and regulators have been busy putting in place programs to reduce greenhouse gas emissions. For the most part, the goals of the programs reflect desired changes to power supply and consumption: increasing the efficiency of electricity generation and delivery, using less fossil […]

Congress’s enactment of the Public Utility Regulatory Policies Act of 1978 (PURPA) triggered a revolution in the development and construction of power plants. PURPA’s creation of an independent class of generators—qualifying facilities (QFs)—exposed a century-old economic myth that had justified restricting ownership of generating facilities to governmental and investor-owned utilities (IOUs). The success of QFs […]

  Historically, states have delegated responsibility for establishing and implementing their energy policy to a public utilities commission (PUC). During most of the 20th century, state PUCs operated with relatively little interference from state legislators. In California, for example, the PUC, created by the state constitution, was vested with the broad authority to independently regulate […]

  State policy makers are characteristically reluctant to recognize that they have advanced a policy as far as they can, and that they must cede some control to fully realize its ultimate benefits. Ceding control often runs counter to policy makers’ political instinct to serve their constituents. Doing so is even harder when a new […]

  The debate over retail choice has resurfaced, triggering in the minds of many consumer advocates California’s failed deregulation attempt and its fallout—rolling blackouts, bankrupt utilities, and government bailouts with crippling long-term consequences. Before allowing a chorus of "oh no, not again" to cloud the debate, state policy makers should realize that allowing generators to […]

Almost half of U.S. states now insist that their investor-owned electric utilities serve a specified percentage of their load with electricity from renewable resources by a date certain. Utilities struggling to comply with their mandate increasingly warn that they will be unable to achieve the required level on time. Yet even as utilities express these […]

The financing of power generation projects increasingly depends on the execution of a long-term power-purchase agreement (PPA). A common prerequisite for considering a PPA to be "effective" is a "final and nonappealable" regulatory order approving it. Purchasing utilities justifiably insist on such certainty to immunize their PPAs from after-the-fact regulatory scrutiny and possible penalty. Unfortunately, […]

U.S. demand for natural gas is projected to increase by more than 50% by 2020. Companies are building—and the public is opposing—receiving terminals on three coasts that would increase imports of liquefied natural gas. The pros and cons of "opening up" Alaska, coastal waters, and federal lands to drilling are still being debated. These politically […]

  What’s in a name? Plenty, if the word is "renewable." Intuitively, most people outside the energy industry consider hydroelectric power "renewable." The dictionary defines the word as follows: "capable of being replaced by natural ecological cycles." Accordingly, rainwater should indisputably qualify as renewable. Yet since the early days of renewable portfolio objectives, most hydro […]

Most sponsors of bid solicitations seek to attract the maximum number of high-quality bids. Basic economic principles tell us that the greater the number of respondents to a solicitation, the greater the competition and the greater the benefits to the solicitor. Somewhat counterintuitively, and notwithstanding California’s need for more electricity supply, the state’s utilities are […]

The length of term allowed for power sales contracts is a critical determinant of the ability of states to meet their increasingly ambitious renewable power targets. Many utilities advocate limiting terms to 10 or perhaps 15 years for renewable energy contracts, emphasizing the "flexibility" that shorter terms offer. In contrast, contract terms of 20 or […]

  More than 20 states now require their investor-owned utilities to serve a certain percentage of their load with renewable energy by a date certain. Other states are considering following suit. Failure to meet its "renewable power" mandate can subject a utility to financial and other regulatory penalties. If structured and supervised correctly, these initiatives […]

      Steven F. Greenwald and Christopher A. Hilen Utility regulators in California and other states have begun subjecting power plants to extensive oversight of their O&M activities. These oversight programs are a response to allegations that generators purposely shut operational plants down to drive electricity prices up during the 2000–2001 energy crisis. These state initiatives […]

The U.S. needs new generating capacity in coming decades to meet growing electricity demand. The increasing scarcity of land within utility load centers, combined with environmental opposition to the siting of plants, often limits siting options to remote locations. Restricting power plants to distant sites necessitates additional transmission facilities, increases delivery costs and electric bills, […]

The Combined Cycle Users’ Group (CCUG) was formed to address issues of importance to users, particularly the interactions among the major systems of combined-cycle power plants: the steam turbine, combustion turbine(s), and heat-recovery steam generator. The added value of becoming a CCUG member is the opportunity to interact with other operators, as well as designers, […]

Competition in power generation fosters technical innovation, cleaner power plants, and downward pressure on prices. Before the 1980s, such competition was almost nonexistent: vertically integrated utilities built and operated the vast majority of U.S. plants with oversight by state regulators. The Public Utility Regulatory Policies Act of 1978 and the Energy Policy Act of 1992 […]

  The U.S. needs to add 600 to 800 billion cubic feet (Bcf) of natural gas storage capacity ASAP. Independent storage providers (ISPs) are the entities best equipped to build this needed infrastructure, but they continue to be restrained by anachronistic regulatory policies. The Federal Energy Regulatory Commission’s (FERC’s) December 2005 rule-making to modify its […]