Regulation and Markets: Ideas for Solving the Identity Crisis

Wilkinson, Barker, Knauer / by Tony Clark

[Energy Wire, sub. req’d] A former member of the Federal Energy Regulatory Commission is warning states not to meddle in electricity markets by trying to pick winners insofar as how power is generated.

Tony Clark, a Republican who served on FERC until the end of September 2016, released a white paper last week to get the attention of state lawmakers and regulators who are or may be under pressure to interject themselves into the nitty-gritty of how much of the nation’s electric industry has operated for 20 years…

[Energy Central] Almost 20 years after restructuring many of the nation’s electricity markets, regulators are navigating a brave new world where states want more than just affordable power. In addition to affordability, state goals now include fuel diversity, security, green energy and job creation, among other things that the administrative markets were never designed to accomplish, according to a white paper by Tony Clark…

“To the degree policy makers and elected officials have moved the goal posts, it is time to consider the rational pathways forward,” the white paper stated. The paper includes recommendations for states in each of these three regulatory models: the Traditional Bilateral Market Model, the Joint Dispatch Market Model (both of which could be considered “vertically integrated”) and the Restructured Administrative Market Model.

Regardless of the model, all states must address some of the same issues, including distribution rate design. Given the rapid development of distributed energy resources such as rooftop solar, states must decide whether their rate structures reflect the changing landscape. States should require utilities to assign fixed costs of networked service to fixed charges and variable costs to variable charges, the white paper said….


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