In many cases, legislators, local entrepreneurs, sophisticated large energy consumers, consumer groups, and others have pushed for policy innovation and pilot projects to take advantage of known and potential technological changes. (Often, regulators prefer pilot projects to test an idea before committing to cost recovery for much larger projects and commitments.) There are also important examples where the federal government has supported innovation at the state and local levels in the electricity supply sector, including by incentivizing (by funding states and local utilities) to invest in areas such as advanced measures, pilot projects, and technological experiments. and even in basic and applied research (e.g. in universities or through national laboratories). Since the establishment of this general assurance framework, NERC has adopted standards covering a wide range of systems and activities that impact the operational reliability of the mass electricity system.13 First, where planned changes in the network indicate violations of reliability standards in the future, transmission companies and system operators are generally successful in justifying proposals to introduce new systems. or to add multi-state transmission facilities and have them approved by the state. Regulators. On the other hand, it is more difficult to obtain permits in situations where transportation improvements could provide net socio-economic benefits (e.g., by opening a congested electricity corridor) or supporting entities necessary to achieve government policy objectives (e.g. renewable or carbon-free portfolio standards, which may depend on opening up access to regions with high-quality wind or solar resources). This could thwart efforts by many states to eliminate greenhouse gas emissions from their electricity sectors. Most state-owned and established public service CUPs protect their judicial prerogatives. While this may (and in many cases) lead to leadership in innovative solutions at the retail level in some states, it can also cause them to resist changes that could enable innovation, especially if a local utility may refuse or control the adoption of newer technologies and designs. Differences between states in a litany of regulatory issues (e.g.
Public service roles and responsibilities, the basic “duty to serve” under the traditional social compact, concerns about risk-taking, and reward for performance) have a significant impact on the opportunities and constraints associated with transitions in the distribution segment of the electricity industry. The organizational form of utilities tended to vary by location: in some parts of the country, and often in urban areas, investor-owned for-profit enterprises assumed this role and were subject to utility regulation under state laws. In other parts of the country (particularly in rural areas), localities have established electricity cooperatives or other utilities to own and operate the electricity grid, with rates set by the boards of directors of these organizations (as they were considered accountable to those who elected them).54 28 Sometimes energy prices are negative if the marginal producer pays a Production Tax Credit. These incentives are worthwhile for this plant to produce electricity, even if participation in the energy market does not generate income and actually entails costs for producers, provided that these costs are less than the benefits of the incentives. In addition, a utility having a PPA to purchase resources eligible for renewable energy credits (RECs) may be willing to pay an additional negative energy price if the utility has paid for energy that is cut off and does not provide CERs and where the utility would otherwise have to replace RECs that were not generated in that project. As part of its consideration of these issues in mass energy systems, the Committee organized a workshop on the latest modelling approaches. (The workshop also focused on modelling transmission and distribution systems; see Appendix F for a summary of the modelling workshop.) The main themes that emerged from the workshop are highlighted in Box 3.2.