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Visions and Models for the 21 st Century. Symposium: An Energy Agenda for the Future May 22, 2014 James M. Van Nostrand Associate Professor West Virginia University College of Law. Center for Energy and Sustainable Development. Overview. Drivers Regulatory economics

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Visions and models for the 21 st century
Visions and Models for the21st Century

Symposium: An Energy Agenda for the Future

May 22, 2014

James M. Van NostrandAssociate Professor

West Virginia University College of Law

Center for Energy and

Sustainable Development


Overview
Overview

  • Drivers

  • Regulatory economics

  • Necessary elements of the new utility model

Center for Energy and

Sustainable Development


Drivers
Drivers

  • Enhanced capabilities of communication and information technologies

  • Improved efficiencies and declining costs in DG technologies

  • Growing dependence on electricity in digital economy

  • Aging infrastructure and need for large capital investments

  • Flat sales base with growing peak demand

  • System stresses from increasingly severe weather events

Center for Energy and

Sustainable Development


Drivers1
Drivers

  • Climate change

    • Mitigation of greenhouse gas (GHG) emissions

      • Clean DG resources, energy efficiency

    • Adaptation

      • Experience of Superstorm Sandy

        • Where did the lights stay on?

          • DG resources and microgrids

        • Where does the utility want to spend ratepayer money?

          • T&D infrastructure and system hardening

Center for Energy and

Sustainable Development


Drivers2
Drivers

  • Climate change (continued)

    • Goal: A more resilient grid to withstand future extreme weather events

      • Decentralized system

      • Seamless integration of DG resources

      • Customer-centered utility system

Center for Energy and

Sustainable Development


Economics
Economics

  • What are the natural monopolies in utility service?

  • What are the other services that can be opened up to competitive forces?

  • How can the platform be designed to ensure fair competition?

Center for Energy and

Sustainable Development


Economics1
Economics

  • The lessons from restructuring of the electric industry at the Federal level

    • Regulate the natural monopoly aspects of utility service

    • Ensure fair competition where markets are competitive

      • Open, fair and non-discriminatory access to the grid

Center for Energy and

Sustainable Development


Elements
Elements

  • Ensuring “open, fair, and non-discriminatory access” to the platform

    • Functional unbundling

  • Continued rate regulation of the natural monopoly elements (i.e., the platform)

  • Performance-based ratemaking

    • Symmetrical system of rewards & penalties

    • Clearly enunciated metrics

Center for Energy and

Sustainable Development


Elements1
Elements

  • Policy objectives for performance-based ratemaking

    • Reduction in GHG emissions

      • Energy efficiency, clean DG resources

    • Empowering customers

    • System resiliency

    • More efficient system (i.e., lower costs)

    • Promoting competition for competitive services

Center for Energy and

Sustainable Development


Questions comments
Questions/Comments?

James M. Van Nostrand

West Virginia University College of Law

Center for Energy and Sustainable Development

[email protected]

(304) 293-4694

Center for Energy and

Sustainable Development


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