Capturing the Power of Electric Restructuring Book

Foreword Joseph T. Kelliher ix

Preface and Acknowledgments xv

About the Editor xvii

About the Contributors xix

Chapter 1 History, Objectives, and Mechanics of Competitive Electricity Markets Walter R. Hall II Kenneth A. Barry Derek Dyson Janice Moore Gaye White Paul Breakman 1

I Introduction 1

II History of Development and Objectives of Competitive Electricity Markets 5

A Laws Governing the Provision of Electric Service in the United States 5

B Objectives in the Development of Competitive Electricity Markets 8

C Genesis of FERC's Open Access Tariff Policy: Order Nos. 888 and 889 10

D The Need for Regional Transmission Organizations: Order No. 2000 and SMD 12

E 2007-2008 OATT and Wholesale Markets Reform 14

III Major Features of U.S. Wholesale and Retail Competitive Electricity Markets 18

A Wholesale Competitive Electricity Markets 18

B Retail Competitive Electricity Markets 28

C Municipal and Other Aggregation Practices 33

IV Preventing and Mitigating Market Power and the California Market Crisis 35

A Preventing and Mitigating Market Power, 1989-2003 35

B Preventing and Mitigating Market Power, 2004 and 2005 37

C The Final Rule: Order No. 697 39

D Reporting and Monitoring 41

E The California Energy Crisis and Subsequent Industry Financial Shake-Out 42

V Status of Regional Competitive Electricity Markets 45

A PJM RTO and Markets 45

B NYISO Markets 53

C New England RTO and Markets 56

D State Retail Market Programs Including Municipal Aggregation 62

E Midwest ISO (MISO) RTO and Markets 63

F CAISO and the California Markets 68

G Southwest Power Pool (SPP) 74

H Texas/ERCOT Markets 77

VI Achieving EnhancedEfficiency in Electricity Use, Renewable Energy Supply, Environmental Sustainability, and New Infrastructure Development 82

VII The Role of Electric Infrastructure Expansion in the Administration's Economic Stimulus Package 88

VIII Reliability Standards Mandated Within Current Energy Markets 91

A The NERC Compliance Registry 92

B Reliability Standards 93

C Regional Variations 94

D Enforcement 95

E Summary 97

Chapter 2 Energy Facility Siting Kenneth C. Baldwin 133

I Introduction 133

II Effects of Deregulation 135

III Electric Facility Siting 137

A Generation Facility Siting 138

B Transmission Facility Siting 151

C Distribution Facility Siting 156

IV Energy Policy Act of 2005 158

A Liquefied Natural Gas Facilities 158

B Federal "Backstop" Transmission Line Siting Authority 158

V Obstacles to Electric Facility Siting 159

A Environmental Concerns 160

B NIMBY and BANANA Interference 160

VI Environmentally Friendly Generation Resources 163

A Fuel Cells 163

B Renewable Resource Credit Programs 164

VII Conclusion 167

Chapter 3 Renewable Portfolio Standards Donald S. McCauley Ari L. Bessendorf Matthew M. Dolan 175

I Introduction 175

II Survey of Incentives for Renewable Development 177

A PURPA, QFs, and Deregulation 177

B State and Local Incentives 179

C The Production Tax Credit 179

D Mandated Renewablss 180

E The Federal RPS 181

F The Voluntary Renewable Energy Market 182

III State RPS Programs 183

A National Overview 183

B California 189

C Massachusetts 191

D New York 192

E Texas 193

IV Certificate Tracking Systems 195

A The NEPOOL Generation Information System 195

B PJM General Attribute Tracking System 196

V Contract Law Issues 197

A Defining RECs 198

B Pricing 198

C Term 199

D Delivery Requirements 200

E Termination, Damages, and Remedies 200

VI Non-RPS Carbon Reduction Initiatives 202

A Regional Greenhouse Gas Initiative 202

B California Assembly Bill 32 203

C Federal Cap-and-Trade System 204

VII Closing Thoughts 204

Chapter 4 A Driving Need, a Vital Tool: The Rebirth of Efficiency Programs for Electric Customers Michael Dworhin Kari Twaite Dan York 209

I A Driving Need, a Vital Tool 209

II Why Fund End-Use Electricity Efficiency Programs? 212

III ACEEE Scorecard for Ratepayer-Funded Efficiency Programs 213

A Background and Overall Trends 215

B Methodology 218

C Results 220

D Summary and Conclusions 224

IV Emerging Issues for Efficiency Programs 226

V The "Efficiency Renaissance" and Efficiency Programs in the Years Ahead 230

Chapter 5 Municipal Electric Aggregation: A Valuable Tool to Enhance Residential and Small Customer Access to Retail Markets Glenn S. Krassen 237

I Introduction 237

II Ohio 239

III Massachusetts 242

IV New Jersey 243

V California 245

VI Other States 247

VII Conclusion 248

Chapter 6 Understanding and Evaluating Competitive Retail Electricity Offers Paul R. McCary Diana Kleefeld 251

I Introduction 251

II What is Subject to Competition? 252

III Components of Generation Price 253

A Energy 253

B Capacity 254

C Ancillary Services 255

IV Electricity Products and Pricing Structures Typically Offered by CEPs 255

A The "All-In" Fixed-Price Product 256

B Energy Pricing Options 256

C Pricing Options for Capacity and Ancillary Services 257

D Pass-Through Costs 258

V. Other Services Offered by CEPs 258

VI Attributes of Power Supplied by the CEP 259

VII Specific Contract Provisions 260

A Term, of Contract and Related Provisions 260

B Quantity of Power Procured 262

C Billing, Payment, and Credit Terms 262

VIII Rescission Rights and Switching Restrictions 263

A Rescission Rights 263

B Switching Restrictions 263

IX Soliciting Offers from CEPs 263

A Qualifications Review 264

B The RFP 265

C Applicable Laws 265

Index 267