Major Federal Regulations

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From the course by Duke University

Electric Industry Operations and Markets

113 оценки

Duke University

Electric Industry Operations and Markets

113 оценки

This is a two week course. In the first week you will learn about the core activities that the Industry executes to bring electricity to customers. We will review what electricity is, how it is generated, how it is transmitted, how it comes into buildings, and how consumption of electricity instantly feeds back on the transmission and generation of electricity. You will learn to: Define what electricity is; Describe how electricity is generated, transmitted and distributed; Describe how electricity is generated, transmitted and distributed; and Summarize how the consumption of electric energy instantly feeds back on the transmission and generation of electricity. In the second week, the course shifts to the markets that drive Electric Industry operations. You will learn about the various costs of the electric industry’s core activities, how electricity is priced, the various ways that electric markets are structured, how these market structures determine which power plants are dispatched to produce electricity when, and how recent changes in generator fuel prices, generation technology, market regulations, and environmental regulations are transforming both Electric Industry Markets and Operations. You will learn to: Describe the main cost components to the electric system; Compare the costs of different types of power plants; Interpret the retail pricing of electricity; Explain the different types of electric markets and understand how they operate to dispatch electric supply to meet demand in real time; and Explain why and how the electric industry is regulated.

From the lesson

Electricity Industry Markets

In this second module, the course shifts to the markets that drive Electric Industry operations. You will learn about the various costs of the electric industry’s core activities, how electricity is priced, the various ways that electric markets are structured, how these market structures determine which power plants are dispatched to produce electricity when, and how recent changes in generator fuel prices, generation technology, market regulations, and environmental regulations are transforming both Electric Industry Markets and Operations.

The Need for Regulation4:55

Who Regulates What1:59

Major Federal Regulations5:56

Meet the Instructors

Lincoln Pratson
Gendell Professor of Energy & Environment
Nicholas School of the Environment

In the early days of the electric industry,

a single electric utility had a monopoly on

its service area controlling all aspects of electricity generation,

transmission and distribution, and being

the sole provider of electricity to customers in the service area.

This model no longer exists in the US as a result

of a series of major federal policies implemented by

the US Congress and enforced first by the Federal Power Commission

and then by its predecessor the Federal Energy Regulatory Commission or FERC.

The history of these policies or acts can be subdivided into two periods.

The first period was largely directed at managing the natural monopoly aspect to

the electric industry so as to ensure

reasonable and stable electricity rates to customers,

increase the availability of electricity throughout the country,

ensure industry safety, and minimize environmental impacts of electricity generation.

Major policies that were enacted during this period which extended from

the 1920s into the 1970s include: The Federal Water Power Act of

1920 which encouraged the development of hydro electric power plants and established

the Federal Power Commission or FPC as

the federal regulatory agency for the electric industry.

The Public Utility Holding Act of 1935 also known as

PUHCA regulated the size and geographic range of utilities and required

public utility holding companies to register with the Security Exchange Commission

whose oversight helped eliminate the monopolistic practices of these holding companies.

The Federal Power Act of 1935 expanded The Federal Water Power Act to

give the FPC jurisdiction over all interstate electricity transmission.

The Rural Electrification act of 1936 provided loans to

co-operative electric companies to install

distribution systems in rural areas and gave rise to co-ops.

The Atomic Energy Act of 1946 established the Atomic Energy Agency later to become

the Nuclear Regulatory Commission and gave

the NRC regulatory oversight of nuclear power plants and their access to transmission.

The Department of Energy Organization Act created the Department of Energy,

changed the Federal Power Commission to FERC and moved FERC under the DOE.

And starting in 1955,

a series of environmental protection acts were

implemented including the National Air Pollution Act,

the Clean Air and Clean Water Act,

and the National Environmental Policy Act which helped spur

the creation of the US Environmental Protection Agency.

The second period of federal policy

emphasizes restructuring of the electric industry to increase

competition in the generation and retail sides of

the industry and thus minimize electricity costs.

This period also includes amendments to

the Clean Air and Clean Water Act that were designed to

further reduce the impact of electricity generation on the environment.

The period, which extends through today in 2015,

begins in 1978 with the Public Utilities Regulatory Policy Act or PURPA.

This Act ended utilities' monopolization

of generation by giving FERC the authority to require

utilities to provide transmission access to

small scale third party generators known as independent power producers.

The next major policy Act during this period was the Energy Policy Act of 1992

which removed restrictions on what qualifies as an independent power producer.

And the third major regulation during this period was FERC order

888 which effectively broke the last hold that integrated utilities had

on controlling access to electricity customers by requiring

all transmission under FERC jurisdiction to provide wholesale transmission services.

In doing this, FERC order 888 separated the generation and

retail ends of the industry from

the transmission and distribution parts of the industries.

Utilities were allowed to keep ownership of transmission and distribution but access

and prices to these lines now became regulated by FERC if they cross state boundaries.

Furthermore, the wholesale generation and

retail sides of the industry were opened up to competition.

Existing utilities could keep their generation assets but these now

had to compete with other generators to provide electricity in the wholesale market.

The restructuring regulations did indeed increase competition in

the electric industry giving rise to electric marketers and optimization of

the generation transmission and distribution assets of multiple utilities and

independent power producers by

Independent System Operators and larger multi-state regional transmission organizations.

However, errors in the implementation of restructuring,

some that could have been avoided and others that were unforeseen,

led to the 2000/2001 California Energy Crisis

in which the state suffered an electricity shortage that was compounded by

market responses and manipulations that bankrupted

one of California's three electric utilities and almost bankrupted another.

California's damaging experience led other states to slow,

stall or even reverse their own restructuring efforts.

As a result, electricity markets in the US still vary from state to state and have

structures that span from

the traditional regulated market to fully restructured and competitive markets.

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