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New Report Urges Competitive Policy Approach in Time of Uncertainty
"Competitive processes provide an important mechanism that allows the market to make offers with different risk sharing arrangements while still providing regulators with continued oversight of resource needs and decisions. It is using these competitive mechanisms in conjunction with strong regulatory oversight that I believe is the best path forward in these uncertain and 'interesting' times."
WASHINGTON, D.C. - The Electric Power Supply Association (EPSA) today released a timely report by Dr. Susan Tierney of the Analysis Group, "Allocating Investment Risk in Today's Uncertain Electric Industry: A Guide to Competition and Regulatory Policy During 'Interesting Times.'" Dr. Tierney is a nationally-recognized expert on energy policy and recently co-led the Department of Energy Agency Review Team for the Obama/Biden Presidential Transition. Over her distinguished career she has also served as the Assistant Secretary for Policy at the U.S. Department of Energy, Massachusetts Secretary of Environmental Affairs, Commissioner at the Massachusetts Department of Public Utilities, and director of the Massachusetts Energy Facilities Siting Council.
Dr. Tierney's new paper outlines the many uncertainties facing electricity suppliers, from future fuel prices, to the impact of demand response and energy efficiency, infrastructure investment, and the form of carbon regulation. She notes that "These conditions pose a complicated set of options for electric companies and for regulators. How does one create an appropriate policy atmosphere in the face of so much risk and uncertainty? An understandable response would be to retreat to the familiar. But what is safe ground in today's environment? I offer two suggestions for how regulators might approach these issues: First, ride the horse you're on (or, as Abraham Lincoln would say, don't change horses midstream). Second, extract the best from principles of competition and regulation."
The paper concludes that "properly structured and independently evaluated competitive procurements provide a constructive means to determine prudent resource outcomes for consumers. Competitive processes provide an important mechanism that allows the market to make offers with different risk sharing arrangements while still providing regulators with continued oversight of resource needs and decisions... It is using these competitive mechanisms in conjunction with strong regulatory oversight that I believe is the best path forward in these uncertain and 'interesting' times."
EPSA President and CEO John E. Shelk said, "With Congress returning this week to continue debating historic climate and energy proposals, it is critical that policymakers incorporate the flexibility well-functioning markets provide to meet the challenges of an uncertain future. Competitive structures, such as independently-administered RTO markets and independently-administered competitive procurements, give consumers the benefits of the most efficient resources to meet their needs, while also achieving clean energy goals. As noted in a previous report prepared by Dr. Tierney and released by EPSA in 2007, various types of competitive electricity markets play a critical role in meeting consumers' resource needs regardless of a state's underlying retail regulatory structure."
Report: Allocating Investment Risk in Today's Uncertain Electric Industry
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CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.