Strategic Policy Choice in State-Level Regulation: The EPA’s Clean Power Plan

Published December 2, 2014 by James B. Bushnell.
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Flexibility in environmental regulations can lead to reduced costs if it allows additional abatement from lower cost sources or if policy tailoring and experimentation across states increases regulatory efficiency. The EPA’s 2014 Clean Power Plan, which implements greenhouse gas regulation of power plants under the Clean Air Act, allows substantial regulatory flexibility. The Clean Power Plan sets state-level 2030 goals for emissions rates (in lbs CO2 per MWh) with substantial variation in the goals across states. The Clean Power Plan allows states considerable flexibility in attaining these goals. In particular, states can choose whether to implement the rate-based goals or equivalent mass-based goals (i.e., emissions caps). Moreover, states can choose whether or not to join with other states in implementing their goals. Using a model of electricity generation across states, we analyze incentives to adopt inefficient rate-based standards versus efficient mass-based standards. We show that adoption of inefficient rate-based standards is a dominant strategy for states from both a consumer’s and a generator’s perspective. We calibrate the model for electricity markets in the Western United States and calculate significant inefficiencies from a failure to coordinate. In particular, state-by-state rate-based standards result in a substantial loss of welfare relative to business as usual. Even a harmonized West-wide rate-based standard dissipates a substantial proportion of the potential gains from regulation. Despite these large inefficiencies, the incentives for adoption of the inefficient policies are substantial particularly for generators.

The U.S. Electricity Industry after 20 Years of Restructuring

Published September 1, 2014 by James Bushnell.
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Prior to the 1990s, most electricity customers in the U.S. were served by regulated, vertically-integrated, monopoly utilities that handled electricity generation, transmission, local distribution and billing/collections. Regulators set retail electricity prices to allow the utility to recover its prudently incurred costs, a process known as cost-of-service regulation. During the 1990s, this model was disrupted in many states by “electricity restructuring,” a term used to describe legal changes that allowed both non-utility generators to sell electricity to utilities – displacing the utility generation function and/or “retail service providers” to buy electricity from generators and sell to end-use customers – displacing the utility procurement and billing functions. We review the original economic arguments for electricity restructuring, the potential winners and losers from these changes, and what has actually happened in the subsequent years. We argue that the greatest political motivation for restructuring was rent shifting, not efficiency improvements, and that this explanation is supported by observed waxing and waning of political enthusiasm for electricity reform. While electricity restructuring has brought significant efficiency improvements in generation, it has generally been viewed as a disappointment because the price-reduction promises made by some advocates were based on politically-unsustainable rent transfers. In reality, the electricity rate changes since restructuring have been driven more by exogenous factors – such as generation technology advances and natural gas price fluctuations – than by the effects of restructuring. We argue that a similar dynamic underpins the current political momentum behind distributed generation (primarily rooftop solar PV) which remains costly from a societal viewpoint, but privately economic due to the rent transfers it enables.

Smart Schools Symposium: Energy Retrofits & New Funding Options

Date: September 5, 2013
Location: University of California, Davis
Event Type: Invitation Only
Description: The UC Davis Energy Efficiency Center, California Lighting Technology Center, Western Cooling Efficiency Center, and Greenwise Joint Venture partnered to present this one-day symposium on proven best practices for lighting and HVAC updates. Representatives from K-12 schools across Northern California engaged in technology and financing workshops, “ask the expert” discussions, and a “vendor match” session for companies and schools interested in partnering on demonstration projects. School leaders also presented case studies on cost-effective retrofit projects already completed or underway.
Event Materials: N/A

Arthur H. Rosenfeld Chair In Energy Efficiency

Arthur H. Rosenfeld Chair In Energy Efficiency (2012)
  • The Arthur H. Rosenfeld Chair was endowed by more than 70 individuals and organizations. Major donors included Pacific Gas & Electric Company, Sempra Energy, California Edison, the California Clean Energy Fund, Chevron, ClimateWorks Foundation, Exelon Corporation, Goldman Sachs, Power Integrations Inc., and Wendy and Eric Schmidt. Dr. Michael Siminovitchholds the Arthur H. Rosenfeld Chair. The endowment helps the chair holder promote the EEC’s mission to develop and commercialize energy-efficient technologies, teach future leaders in energy efficiency, and conduct critical policy-supporting research.

Retrofitting Corporate Campuses

Date: November 8-9, 2011
Location: University of California, Davis
Event Type: Invitation Only
Description: This forum addressed the particular needs, goals, and challenges of corporate campuses. It provided an opportunity for stakeholders, including facility managers, policy makers, and researchers, to share strategies and solutions for increasing energy efficiency on corporate campuses.
Event Materials: N/A

Addressing California’s Water-Energy Challenges

Date: June 15, 2011
Location: Los Angeles, CA
Event Type: Invitation Only
Description: UC Davis, in partnership with the Southern California Leadership Council, and with sponsorship from Southern California Gas Company and San Diego Gas & Electric, convened and facilitated an executive roundtable discussions between key stakeholders to address California’s water-energy efficiency nexus.
Event Materials: N/A

The Roots of Energy Efficiency

Date: October, 2008; April, 2009; June, 2010
Location: Various Locations
Event Type: Open
Description: The UC Davis Energy Efficiency Center, in partnership with Chevron, presented a series of three forums exploring California’s rich past—and promising future—as a global innovator of energy-efficient technologies and policies.
Event Materials: 
Event Summary
Event Video

The Rosenfeld Symposium

Date: March 9, 2010
Location: University of California, Davis
Event Type: Invitation Only
Description: The UC Davis Energy Efficiency Center honored one of its greatest mentors and advisors, Arthur H. Rosenfeld. Nicknamed appropriately “The Father of Energy Efficiency,” Art created a legacy of technology, policy, and people in California, the nation, and the world.
Event Materials: 
Event Summary

EEC Climate Initiative

EEC Climate Initiative (2009)
  • Sempra Energy provided $100,000 of financial support to the EEC Climate Initiative, a series of Photo
    research activities and workshops studying the energy-efficiency applications required to implement California’s Global Warming Solutions Act of 2006, also known as AB32. The California Clean Energy Fund (CalCEF) participated.

Sempra Chair In Energy Efficiency

Sempra Chair In Energy Efficiency (2007)
  • Sempra Energy provided a $400,000 endowment toward the creation of a Sempra Energy Chair in Energy Efficiency, one of the first energy-efficiency chairs at a major U.S. university. Dr. Mark Modera holds the Sempra Chair in Energy Efficiency.