Hear consumer advocates Elin Katz (Connecticut Office of Consumer Counsel) and Dave Kolata (Illinois Citizens Utility Board) on how companies can collaborate with them to create value, accelerate innovation, and harness new technologies.
These are uncertain times for competitive electricity markets. Cheap natural gas, zero marginal cost renewables, and stalled demand growth have deflated energy prices. Merchant generators are getting subsidies to survive and states that were once pioneers of deregulation are getting cold feet.
At this important inflection point for our energy future, regulators need to take a step back and look at the full picture. With electricity markets struggling, time is running out to give demand participation an equal role in competition. Competitive retailing was supposed to accomplish this, however the results have been disappointing.
Will the genie of deregulation go back in the bottle? How can we get retail competition right? What is the role of regulators? [Read more…]
Today is an exciting time to be engaged in evolving the world’s energy systems. With the right supportive environment, adaptive business models could emerge that benefit both incumbents and new entrants. The result could be a safer, cleaner, and more prosperous world for all.
After extended graduate reading and research on modern electricity regulation, markets, and operations, I’ve concluded that there are several tools at our disposal that could accelerate the development of new capabilities in our energy systems. In this paper, I outline ten examples of design options that could significantly enhance and catalyze the transition towards a first-best energy future. [Read more…]
When electricity markets were originally designed, it was assumed that responsive demand would play an essential role. After nearly two decades of experimentation, most electricity market models have yet to incorporate demand participation.
Because most electricity markets evolved with inelastic demand as a foundation, market power became a real problem. Conversely, the control measures that were put in place to mitigate the exercise of market power have become an impediment to responsive demand. We can break this cycle now by implementing demand participation with today’s technologies.
In 1988, MIT Professor Fred Schweppe, BU Professor Michael Caramanis, UCSD Professor Roger Bohn, and MIT researcher Richard Tabors published a book titled “Spot Pricing of Electricity” that forever transformed electricity markets in many parts of the world. Unfortunately, that same year Fred Schweppe tragically passed away.
Although Schweppe has been credited with developing the foundational concepts for competitive electricity markets, the premise of his work—demand participation—has been largely absent from most market designs. The following is a summary of the book, which has become scarcely available outside of select academic libraries. Schweppe’s original work contains detailed mathematical derivations and additional content beyond what is covered here. [Read more…]
Reactive power is both obscure for non-engineers and important in the design of electricity systems, especially at the distribution level. While understanding reactive power requires knowledge of integral calculus, the basic intuitions can be understood without rigorous mathematical study. As distribution systems become more complex with distributed energy resources and demand automation, industry participants need a common grasp of the implications of “imaginary power” for system efficiency and stability. [Read more…]
In his 1971 paper “The Theory of Economic Regulation”, George J. Stigler proposed a framework to consider the motivations of various stakeholders and the influence that they have on regulatory policies. His premise was that the state could use its power to prohibit or compel, through financial restrictions or benefits, to selectively help or hurt industries. Furthermore, the theory of economic regulation should explain the affected parties, form of the regulation and effects on allocation of resources. [Read more…]