Transition Losses in the Electric Power Market: A Challenge to the Premises Underlying the Arguments for Compensation

In this Article, Professor Lois R. Lupica examines whether the electric utility industry, currently j.n the midst of deregulation, ought to sustain the resulting transition losses. Due to the signifi· cant modification of legal rules affecting the electric power market and changes in regulatory policy, the utilities currently have expenditures and expectations that are unrecoverable in a competitive market. In recent years, momentum has moved in the direction of compensating the electric utilities and their investors for these losses. Professor Lupica challenges the arguments for transition loBS recovery and ultimately concludes that the doctrinal premises in support oftransition loss recovery are flawed. The Article begins by examining the history of the electric power market and continues by addressing the central arguments in favor oftransition loss recovery. Proponents oftransition loss recovery argue that investors will suffer losses as a result ofa change in market dynamics or legal rules, and because the changes were not foreseeable, investors should be insulated from these resulting losses. Advocates of transition loss recovery further perceive the regulatory environment as contract-based, and thus argue that the modification ofthe market\u27s legal rules constitutes a breach ofcontract. Finally, some advocates claim that changes in legal rules and the resulting transition losses is a taking of property under the Fifth Amendment. Professor Lupica addresses each of these arguments and contends that the premises underlying these arguments are faulty. She further argues that transition losses are not unique to this context, and that, in addition to acknowledging the doctrinal challenges to recovery advocates\u27 arguments, policy makers must evaluate transition loss recovery as an issue of fundamental fairness to utility consumers

Clean Energy Federalism

Legal scholarship tends to approach the law and policy of clean energy from an environmental law perspective. As hydraulic fracturing, renewable energy integration, nuclear reactor (re)licensing, transport biofuel mandates, and other energy issues have pushed to the forefront of the environmental law debate, clean energy law has begun to emancipate itself. The emerging literature on clean energy federalism is a symptom of this emancipation. This Article adds to that literature by offering two case studies, a novel model for policy integration, and theoretical insights to elucidate the relationship between environmental federalism and clean energy federalism. Renewable portfolio standards and feed-in tariffs both seek to mitigate global climate change by promoting low-carbon, renewable energy. Despite their shared objective, subtle differences in the design characteristics and regulatory requirements of both policies point to different policy innovation pathways, recommending renewable portfolio standards for implementation at the federal level and feed-in tariffs for implementation at the state level. Contrary to the literature\u27s traditional view that renewable portfolio standards and feed-in tariffs are mutually exclusive policy alternatives, this Article proposes a model for closely integrating both policies toward a better, more efficient allocation of investor and regulatory risk. Properly integrated, such a joint policy regime could harness the competitive market forces inherent in portfolio standards and redirect them to optimize overall risk allocation. With aggregate risk mitigation greater than the sum of its parts, an integrated policy regime could leverage higher private-sector investment in renewables while requiring lower returns than necessary under less coordinated current policy approaches. From a theoretical perspective, this Article illustrates how clean energy federalism both draws on and advances the theories shaping today\u27s environmental federalism discourse. Specifically, this Article calls for a more nuanced, multidimensional application of environmental federalism\u27s matching principle, offers support for a more open-ended, institutionally agnostic public choice narrative, and operationalizes dynamic federalism theory in the clean energy arena

Hedging natural gas price risk by electric utilities : a comparison of fuel switching to financial contracts

Thesis (M.S.)--Massachusetts Institute of Technology, Dept. of Nuclear Engineering, 1994.Includes bibliographical references (p. 73-75).by Frank Andrew Felder.M.S