Energy Central EnergyPulse Home
Home Subscribe Login Contribute to Energy Pulse Advertise on Energy Pulse About Energy Pulse Feedback to Energy Pulse
Search Articles:   
  You are here: Home > Policy, Regulatory & Legal > Article Display


Free Newsletter
Sign up today for your free subscription to the EnergyPulse Weekly Update - delivered directly to your e-mail box.
e-mail:


 

Communicating Smart Meter Value

Sep 9 2010 - 2010-01-01 12:00:00 - Your City

If you are involved in Management or Customer Service and are responsible for communicating the value of smart meters to your utility customers, you don’t want to miss this online discussion - Communicating Smart Meter Value.  more...

Social Media: The new frontier in recruiting, communications and marketing

Sep 13 2010 - 2010-01-01 12:00:00 - Your City

Join social media mavens Matthew Burks and Amanda Shewmake as they provide an insider's perspective on how HR, communications and marketing professionals in energy companies can harness the power of social media to be more effective and productive. more...

Eliminating Obstacles and Delivering the Benefits of the Smart Grid - IBM's Optimized Energy Value Chain (OEVC)

Sep 14 2010 - 2010-01-01 12:00:00 - Your City

The convergence of power and information technologies in the smart grid has created opportunities for finer grained and broader controls of energy flows. These opportunities can improve electric service in multiple dimensions: lower cost, greater reliability, greater customer satisfaction, and more...

Achieving Operational Excellence - What to Consider Before Implementing or Upgrading Your Distribution Management Solutions

Sep 16 2010 - 2010-01-01 12:00:00 - Your City

Significant cost over runs. Changing business requirements. A well thought out plan is essential. Attend this free webcast discussion to hear inside hear three experts in utility operations discuss what utilities need to evaluate when they are considering upgrading or more...

Outsmarting the Smart Grid: IT, Security and Communication Infrastructure  Challenges & Opportunities for Utilities

Sep 21 2010 - 2010-01-01 12:00:00 - Your City

The smart grid is shifting the playing field for utilities. And when the game changes, it pays to be prepared. A nimble solutions partner can help you design the solutions that keep operations on track, even as new challenges come more...

1st CSP Today Concentrated Solar Thermal Power Summit India

Sep 7 2010 - Sep 8 2010 - New Delhi India

Deliver a profitable, productive and commercially successful large scale CSP business in India. Building on the success of past events in USA, Europe & MENA, CSP Today brings to New Delhi the most relevant international experience for the concentrated solar more...

Offshore Wind Energy in North America's Great Lakes Conference

Sep 9 2010 - Sep 10 2010 - Toronto

Two day conference that tackles the most important challenges. A blend of European knowledge from the companies who have been installing offshore wind turbines for the last decade alongside local state governing bodies and leading project developers. Permitting, securing long more...

Autovation 2010

Sep 12 2010 - Sep 15 2010 - Austin, TX - USA

Autovation 2010 is a not-to-miss educational forum that will attract utility executives from around the world looking for new ways to optimize their operations through automation technologies. more...

Global Sustainable Bioenergy North American Convention

Sep 14 2010 - Sep 16 2010 - Minneapolis, MN - USA

The North American convention provides a remarkable opportunity to play a part in guiding renewable energy policy for the 21st century. Attendees will create a resolution that, along with similar resolutions already drafted on four other continents, will help set more...

GridWise Global Forum

Sep 21 2010 - Sep 23 2010 - Washington, DC - USA

Hosted by the GridWise(R) Alliance and the U.S. Department of Energy, the GridWise Global Forum will convene thought leaders from the highest levels of government, business, NGOS, and academia from around the world to discuss the ultimate enabling potential of more...

1. Intro to Nat Gas Trading & Hedging 2. Option Applications in Energy

Sep 20 2010 - Sep 23 2010 - Houston, TX - USA

Introduction to Natural Gas Trading & Hedging - This program provides a comprehensive understanding of the structures that underlie Natural Gas trading. Beyond Essentials: Option Applications in Energy - This course provides a solid practical and conceptual (non-quantitative) understanding of more...

Electric Business Understanding Seminar

Sep 20 2010 - Sep 21 2010 - Houston, TX - USA

Electric Business Understanding provides a comprehensive overview of the electric industry. Position yourself for career advancement by gaining a solid understanding of how the electric business works including key physical, market, and regulatory aspects and how market participants navigate this more...

Electric Market Dynamics Seminar

Sep 22 2010 - Sep 23 2010 - Houston, TX - USA

Electric Market Dynamics offers participants an in-depth understanding of North American electric markets and how they function. Enhance your career by furthering your knowledge of market structures, pricing mechanisms, services offered in markets, and how various participants use the markets more...

Gas and Electric Business Understanding Seminar

Oct 5 2010 - Oct 6 2010 - Los Angeles, CA - USA

Gas and Electric Business Understanding provides a comprehensive overview of the natural gas and electric industries. Position yourself for career success by gaining a solid understanding of how each business works, including key physical, market and regulatory aspects, as well more...

Energy Central
Power Network




Policy, Regulatory & Legal


We know you have something to say!
There is an immediate need for articles on the hot topics in the Power Industry! EnergyPulse, like no other publication, also provides a means for our readers to immediately interact with experts like you.
 
Contribute Today!
Please view our Author Guidelines and send submissions to the editor.

Click For More Articles on Policy, Regulatory & Legal
 
Cooperative Federalism
7.6.09   Roger Feldman, Counsel, Andrews Kurth LLP

Article Viewed 4268 Times
10 Comments
E-mail Article Printer Friendly
 
  • Comment On Article
  • About The Author
  • More Articles By This Author

    In the absence of "Cooperative Federalism" the development of so-called "Green Infrastructure," as contemplated both by the Stimulus Package and by the forthcoming initiatives from the President and Congress in the areas of energy, security, and climate change regulation, will be thwarted.

    We are heading toward an impasse in practical legislation unless this fact is addressed directly in the formation of the new laws--and indeed, in the implementation of the Stimulus Package in an effective way as well.

    The absence of Cooperative Federalism is the insistent legal theme embedded in the swirling policy and economic debate of how national policy objectives should be achieved. Issues of Federalism are often dismissed by proponents of policy change as vestigial legacies of constitutional tradeoffs made long ago, or as a smokescreen of arguments designed to conserve the political or economic status quo. Conversely, sometimes they are ennobled as the protectors of the intended liberty and rights of the individual and private enterprise. In the energy/environment area, though, I would suggest that there is one underlying pragmatic issue with which we all are wrestling: how can the profile and technical operations of the electrical utility industry be adapted to the energy challenges of the 21st Century within our Federal legal framework of governance?

    The legislative flashpoints are the debates over Renewable Portfolio Standards, carbon cap and trade legislation, and transmission reform. In each case, the question is framed as Federal vs. state governance. The issue ultimately is evolutionary: one of adaptation of the rules of governance so that our national engine of private enterprise (in this case utilities) can operate in a manner aligned with national needs.

    Since the days of Thomas Edison and Samuel Insull, utilities have been regulated, and they've operated on the principle of minimized system cost (whether termed "locational," "marginal pricing," "economic dispatch," or simply "free market economics"). Much of this regulation has been done at the state level and, while transmission and some activities of some utilities have been Federalized over time, the basic governing principle of minimized system cost has been embodied there as well, save for a few special incentive-rate-type programs.

    Come now certain interrelated developments which challenge the adaptability of the first principle or regulation:

    Concern with greenhouse gases can only be dealt with at significant cost, which euphemistically we now call upon to be "internalized." Similarly, "energy security" intrinsically has a cost, which will surely be increased if grid-based electricity becomes a significant basis for automobile power.

    At the present time (putting aside the nuclear debate, which itself has Federal-state ramifications), the means to reduce GHG and increase security appear to be (and the Stimulus Plan has thrust them forward through incentives and raw cash): (a) renewables, and (b) associated transmission requirements--energy-efficient "smart grids," notably though not exclusively, in their distributed generation form.

    Unfortunately for utilities, these solutions have a drawback more or less in common and, unless something is changed, their marginal costs and state oversight impacts on utilities are both negative. Neither electrons nor carbon molecules respect borders. Consequently, if external costs are to be internalized principally through targeted energy and emission legislation--as opposed to blanket taxation--electric utilities will likely bear a significant burden of these costs.

    The matter is further complicated when new Federal rules are proposed to overlay state regulation, because of the rise of regionalism. As with most energy matters, effort to address cost internalization has taken on a regional character; the fuels, uses, and topography which utilities confront obviously vary. Moreover, as a result of the last wave of reform, this regional character is overlaid by the fact that, while some utilities operate on a fully-integrated basis, other have been subject to more-or-less deregulation. Since there has been an approximate vacuum in Federal regulation focused on the proposed energy/environmental fixes, we have seen the emergence of various types of regional responses, notably in the environmental field, but in the transmission field as well.

    In the absence of Federal regulation in some areas, states have taken action individually, e.g., Resource Portfolio Standards. In some cases, through, regional organizations have propounded their own solutions, e.g., carbon regulation and, in some cases, in a partial relationship with Federal regulators, e.g., transmission. In still other cases, through, what has emerged are strategies for Federal delegation, e.g., energy efficiency, with advisory Federal guidelines.

    Consequently, the Federalism issue is not one of writing on a blank slate, either in practice or in legal theory. Consequently, the need for "Cooperative Federalism" is even greater than would naturally be assumed to be the case.

    That said, for the 21st Century utility and its state regulators, what will this "Cooperative Federalism" look like?

    I would suggest that reference to the emerging "Smart Grid" case might be one starting point to illustrate creative new approaches. The potential of the Smart Grid is clear: It ranges from traditional possibilities such as monitor and control of intermittently-generated renewable resources, like wind and solar, to those notably associated with efficiency, e.g., scheduling the charging and discharging of distributed storage. The theoretical means by which the Smart Grid could operate is clear, too: some kind of integration of one or more "platforms" through which signals or integration can allow the information received from individual control applications to run, charge, or discharge utility response.

    However, there are not only technical but political constraints to be overcome. Above all, the utility must receive, from regulators, market signals which definitely reward it for its appropriate behavior.

    As the Stimulus Package implicitly recognizes, investments must be made. Regulated utilities cannot themselves, within the parameters of their framework of operation and regulations, afford to make these investments.

    The NARUC/FERC Smart Grid Collaborative Proposed Funding for the "Stimulus Package" Smart Grid Matching Grant and Demonstration Program general criteria, addresses the issues of how cooperative Federalism and utility contribution to national energy goals can be reconciled, including:

    • Funding--how has the project minimized the possibility of stranded investment by designing for the ability to be upgraded?
    • Overarching criteria--including regional diversity and representation of urban, rural, and suburban settings
    • Technology criteria--including an open architecture that can become the basis for interoperability with multiple applications
    • Rate design--compatibility of existing or proposed rate designs with the purposes for which a project is designed
    • Regulatory--coordination of the project with the RTO and/or system operator
    • Information/data requirements designed to measure performance and also to measure receptivity of customer response
    This type of guideline points the way to two basic conclusions:

    • The 21st Century utility must be one which delivers new "smart" technologies, which is to say, it is adaptive to Federal policies and regional requirements.
    • The Cooperative Federalism necessary to develop green infrastructure suitable to our changing society not only must be oriented toward ongoing receptivity to new technology, but also adaptive to regional differences without adopting a one size fits all model.
    In sum, the answer to modern national energy infrastructure needs will not be found in the Supremacy or the Commerce Clause, or preservation of state regulators' cost allocation and siting powers. The keys will be:

    • Flexible technology criteria;
    • Regional adaptivity; and
    • Focus on on-going financial sustainability.
    For information on purchasing reprints of this article, contact Tim Tobeck ttobeck@energycentral.com.
    Copyright 2010 CyberTech, Inc.
     
    E-mail Article Printer Friendly
     
  • Click Here For More Articles on Policy, Regulatory & Legal


  • Click Here For More Articles By Roger Feldman
  • Do you agree or disagree with this article? Send in your own article.

     

    Readers Comments

    Date Comment
    Ferdinand E. Banks
    7.6.09
    Please oh please forgive me for saying this, but as an American and a Democrat I have a bad feeling about the energy program of the new American government. I don't think about that program very often, but when I do I can't help concluding that it doesn't make any sense at all. Of course, I could be very wrong, but I suspect that - to use a beautiful expression of Dean Acheson - somebody has been led down the garden path. And listen, this is different from the macro and financial market imbroglio, because working with those issues are some very brainy people. As far as energy is concerned, the waterboys and cheerleaders are being sent in.

    Len Gould
    7.6.09
    (re Smart Grid) "Above all, the utility must receive, from regulators, market signals which definitely reward it for its appropriate behavior." -- It's tempting to view that situation as one wherein the utilities have accidentally and through no fault of their own, fallen into the position of gatekeeper and are prepared to drag out the implementation until paid off.

    Bob Amorosi
    7.6.09
    "As far as energy is concerned, the waterboys and cheerleaders are being sent in."

    It certainly appears that the US government doesn't want to send in the professional players on the playing field. Perhaps one should ask oneself why not, and I would suggest it's because the government, and the voters, don't believe in playing the same game anymore. The status quo regarding traditional electrical energy sources and the grid infrastructure is no longer acceptable, rightly or wrongly. And I would bet it has something to do with the traditional ways of expanding the grid's capacities being too costly to swallow in the current regulatory framework, and fraught with too many problems.

    This article is right on though, throwing money handouts for Smart Grid development is not enough in itself to enable the new players and implement new ways of managing the grid. Len is correct (again) in that our utility companies are prepared to drag out its implementation until THEY benefit from it as much, if not more, than consumers are expected and intended to benefit from it.

    It should be a very interesting future for the utility industry in the US, and in Canada, even if it takes many years to unfold.

    Ferdinand E. Banks
    7.7.09
    There is an article on this site called "Wind, backup power and emissions". People who are interested in this issue should read the comments to that article, because as far as I am concerned they are invaluable.

    By people who are interested in this issue I include people who think about this issue only a few minutes a day - or maybe a week. I especially hope that President Obama's environmental team - note, 'environmental' team and not energy team ( because he doesn't have an energy team yet) - looks at those comments and tries to learn something from them.

    It would also be nice if the individuals who think that they know something about all this would consider the macroeconomic side, because ladies and gentlemen, when the present macroeconomic meltdown or partial meltdown blows over, the Chinese are going to try to transfer a large slice of the industrial capacity of North America and Europe to the empty spaces in China. In order to avoid having to use some non-academic language, I won't attempt to explain what that could mean because mostly I don't know myself, but I suspect that it won't be nothin' nice.

    Len Gould
    7.7.09
    Agreed about Chinese, Fred. My only hope is that they can rapidly develop into a fairly wealthy consumer society fast enough to not cause a REAL economic collapse worldwide outside of China.

    Bob Amorosi
    7.7.09
    I must also agree with Fred and Len about China, and indeed they have already captured a big chunk of America's (and Canada's) manufacturing capacity.

    While I don't have a comprehensive list, I can name whole industries that have disappeared from Canada's manufacturing sectors over the last several decades, where they have been replaced by companies in the far east including China. For example the last Levis jeans sewing plant in North America, located in southern Ontario, shut its doors about 5 years ago in favor of newer Levis plants in Asia that are rife with cheap labor, and have no environmental laws to comply with as we have here. Other clothing and shoe companies there are known to use child laborers too.

    Even in my industry of electronics manufacturing, there has been stiff competition from China and other far-east countries for years now, and it's getting tougher. Some predict our automotive industries will be next to go the way of the dodo bird.

    China is well known for NOT really wanting to buy our products, but they crave acquiring our manufacturing technologies to manufacture their own. I suppose Canada and US think the emerging energy technologies for Smart Grid and distributed generation can be sold to the Chinese if we develop them first, but you can bet they will surely copy them AFTER WE swallow all the R&D expense and effort to develop them first.

    James Carson
    7.11.09
    Ferdinand & Bob, I, for one, am not afraid of competition from the Chinese. As to the extreme laws that restrict industry in the US and Canada, perhaps you should look at who in Congress & Parliament made those laws, and then vote accordingly.

    Len Gould
    7.13.09
    James: I do hope that "the extreme laws that restrict industry in the US and Canada" are not those same ones responsible for a decent life for labourers here, as opposed to Chinese laws which provide for 50 cents a day for anyone old enough to stand and pitch asbestos by the handful with a paper mask; or which explicitly equate "productivity" with "reduced wages" (just try the substitution the next time you're listening to a talking ___head on CNBC). Our grandparents fought a bloody war here to have that fixed, though "modern" history books conveniently ignore it. Flirting with revolution (again). When your head rolls, don't say you wern't warned.

    James Carson
    7.14.09
    No, Len, I am thinking more about the foolish environmental laws that have driven responsible industry out of business or to the far east where they can pollute to their heart's content.

    Len Gould
    7.14.09
    "foolish environmental laws" -- I will agree if you mean that they're foolish because they were implemented without also covering the far east etc. to the same standard at the same time.

    Add your comments:
    Please log in to leave a comment!

    Top

        Home | Register | Subscribe | Contribute | Advertise | About Us | Feedback
       Copyright © 2002-2010, CyberTech, Inc. - All rights reserved. Read our Terms of Service.