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North Carolina Electricity Planning

The electricity system is facing new pressures from a changing generation mix, new technologies, consumer demand, and evolving utility business models. Planning for these changes will require participants in the process—utilities, regulators, consumers, and other stakeholders—not only to engage with these coming shifts but also to think critically and collectively about ways to address them. In North Carolina, two regulatory bodies share responsibilities for electricity planning: the North Carolina Energy Policy Council (EPC) and the North Carolina Utilities Commission (NCUC). The EPC is responsible for setting the state energy plan; the NCUC approves utility-developed integrated resource plans that forecast future electricity demand and options for meeting it. These two planning processes have different stakeholder-engagement opportunities, forecasting requirements, and outcomes. Robust electricity planning that is based on a comprehensive and coordinated policy framework across agencies and that creates strong stakeholder alignment has multiple benefits, including increased regulatory certainty, diverse stakeholder engagement in a common goal, and clear understanding among stakeholders and decision makers of electricity generation, transmission, and distribution options. North Carolina has a range of options to institute comprehensive electricity planning that is aligned with effective planning principles and that builds on its past successes.

Authors: Kay Jowers and Amy Pickle

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State Policy

Working Papers

Transport of Hydraulic Fracturing Waste from Pennsylvania Wells: A County-Level Analysis of Road Use and Associated Road Repair Costs

Pennsylvania’s rapid unconventional oil and gas development—from a single well in 2004 to more than 6700 wells in 2013—has dramatically increased unconventional oil and gas waste transport by heavy trucks. In an article published in the Journal of Environmental Management, researchers at the Nicholas Institute for Environmental Policy Solutions and the U.S. Geological Survey report that transportation of waste associated with the development of unconventional oil and gas in Pennsylvania increases the cost of road repairs not only in Pennsylvania but in counties in the surrounding states of West Virginia, Maryland, New Jersey, Ohio, and New York. Between July 2010 and December 2013, the estimated cost to repair roads damaged by trucks transporting unconventional oil and gas waste ranged from $3 million to $18 million. Although the majority of these costs were concentrated in Pennsylvania (79 percent), Ohio counties absorbed some of them (16 percent). The study includes an interactive graphic for visualization of the data.   

Authors: Lauren A. Patterson and Kelly O. Maloney

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Hydraulic Fracturing and Water Use

Climate and Energy

Water Policy

Environmental Economics

State Policy

Journal Articles

Ongoing Evolution of the Electricity Industry: Effects of Market Conditions and the Clean Power Plan on States

The electricity industry is evolving as changes in natural gas and coal prices, along with environmental regulations, dramatically shift the generation mix. Future trends in gas prices and costs of renewables are likely to continue moving the industry away from coal-fired generation and into lower-emitting sources such as natural gas and renewables. The U.S. Environmental Protection Agency’s Clean Power Plan (CPP) is likely to amplify these trends. The CPP rule regulates emissions from existing fossil generators and allows states to choose among an array of rate-based and mass-based goals. The analysis in this paper uses the electricity-dispatch component of the Nicholas Institute for Environmental Policy Solutions’ Dynamic Integrated Economy/Energy/Emissions Model to evaluate electricity industry trends and CPP impacts on the U.S. generation mix, emissions, and industry costs. Several coordinated approaches to the Clean Power Plan are considered, along with a range of uncoordinated “patchwork” choices by states. The model results indicate future industry trends are likely to make compliance with the Clean Power Plan relatively inexpensive; cost increases are likely to be on the order of 0.1% to 1.0%. Some external market conditions such as high gas prices could increase these costs, whereas low gas or renewables prices can achieve many of CPP goals without additional adjustments by the industry. However, policy costs can vary substantially across states, and may lead some of them to adopt a patchwork of policies that, although in their own best interests, could impose additional costs on neighboring states.

Authors: Martin T. Ross, David Hoppock, and Brian C. Murray

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Climate and Energy

Clean Air Act

Environmental Economics

Energy Sector

State Policy

Working Papers

Cost Distribution Impacts of Clean Power Plan Compliance Pathways

Under the Clean Power Plan, different utilities and power producers are likely to be in different positions: some will benefit from the rule, and others will face high compliance costs. This cost distribution may lead to monetary transfers—redistributions of money, income, or value from one party to another that are not necessarily driven by a change in the corresponding cost of production—among utilities and other power producers, between generators and consumers, and among consumers of different utilities. The regulatory system for each state’s electric utilities and the strength of regional electricity markets will play a major role in determining how the cost distribution and potential transfers play out, especially for ratepayers. This policy brief explores the cost distribution impacts for electricity producers of rate-based and mass-based compliance, respectively. It also considers how wholesale markets may mediate these producer impacts of rate- and mass-based compliance. It then turns to the implications for electricity consumers under various market and regulatory structures. Finally, it identifies opportunities to address distributional impacts if states wish to do so. It finds that states adopting a mass-based compliance approach can use allowance allocation to largely control monetary transfers within a state. States adopting a rate-based compliance approach lack this direct control mechanism.

Authors: David Hoppock and Sarah Adair

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Climate and Energy

Clean Air Act

Environmental Economics

Energy Sector

State Policy

Policy Briefs

The Clean Power Plan and Electricity Demand: Considering Load Growth in a Carbon-Constrained Economy

Release of the Clean Power Plan (CPP) marks a significant moment in U.S. climate policy, but a host of economic, technological, and regulatory factors are also driving significant change in the electricity sector, complicating state regulatory decision making. Ensuring access to reliable and affordable electricity while protecting public health is a central goal of state regulation of electric utilities. Thus, expectations about the future of the electricity sector in general, and the future of electricity demand and emissions trajectories in particular, will likely play an important role in state CPP decisions. This policy brief discusses load growth—rising electricity demand—in the context of CPP design choices and demonstrates that it may occur under either a rate-based or mass-based approach. Following a brief overview of the Clean Power Plan and state choices, including rate-based and mass-based performance standards, it summarizes recent trends in load growth and carbon dioxide emissions in the U.S. electricity sector, showing how electricity demand growth in the United States has been low for more than a decade while the carbon intensity of electricity generation has declined. It then explores how both rate-based and mass-based plans can accommodate load growth and future emissions. Although no CPP approach limits electricity generation growth to meet new demand, rate-based approaches and mass-based approaches that cover only existing sources also allow emissions from new sources to increase. Mass-based plans that cover new sources would not limit electricity generation growth, but they would limit emissions from all covered sources.

Authors: Sarah Adair, Christina Reichert, Julie DeMeester, and David Hoppock
 

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Climate and Energy

Clean Air Act

State Utility Regulation

Environmental Economics

Energy Sector

State Policy

Policy Briefs

Incremental Climate Policy via the Clean Air Act

The Nicholas Institute for Environmental Policy Solutions' Jonas Monast and Christina Reichert write in the American Bar Association's publication Trends that tegulators implement climate policy based on the law Congress enacts, not the law they may wish Congress would enact. For the Obama Administration, that law is the existing Clean Air Act. More Clean Air Act-based climate policy is on its way. In October 2015, the White House announced forthcoming regulations limiting emissions of climate-forcing hydroflurocarbons, and the Clean Power Plan potentially sets the state for carbon dioxide limits for existing facilities and other sectors. Step-by-step, the U.S. Environmental Protection Agency is developing a broad strategy to reduce the nation's greenhouse gas emissions using existing statutory authority.

Authors: Jonas Monast and Christina Reichert

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Climate and Energy

Clean Air Act

State Utility Regulation

Environmental Economics

Energy Sector

State Policy

Journal Articles

Why Have Greenhouse Emissions in RGGI States Declined? An Econometric Attribution to Economic, Energy Market, and Policy Factors

The Regional Greenhouse Gas Initiative (RGGI) is a consortium of northeastern U.S. states that limit carbon dioxide emissions from electricity generation through a regional emissions trading program. Since RGGI started in 2009, regional emissions have sharply dropped. This analysis uses econometric models to quantify the emissions reductions due to RGGI and those due to other factors such as the recession, complementary environmental programs, and lowered natural gas prices. It shows that without RGGI, emissions would have been 24 percent higher. The program accounts for about half of the region’s post-2009 emissions reductions, which are far greater than those achieved in the rest of the United States.

Authors: Brian C. Murray and Peter T. Maniloff

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Environmental Markets

Climate and Energy

Environmental Economics

Energy Sector

Modeling

State Policy

Journal Articles

Environmental Justice Roundtable Report

This report from the Nicholas Institute for Environmental Policy Solutions and the Kenan Institute for Ethics summarizes discussion from a roundtable with experts from Duke University, the University of North Carolina at Chapel Hill, and North Carolina State University and Research Triangle Institute that explored the multiple starting points for environmental justice research in the Triangle area.

Editor (s): Kay Jowers and Suzanne Katzenstein

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Environmental Justice

State Policy

Reports

Enhancing Compliance Flexibility under the Clean Power Plan: A Common Elements Approach to Capturing Low-Cost Emissions Reductions

As states and stakeholders evaluate compliance options under the U.S. Environmental Protection Agency’s proposed Clean Power Plan, many recognize the potential economic benefits of market-based strategies. In some states, however, market approaches trigger administrative and political hurdles. A new policy brief by the Nicholas Institute for Environmental Policy Solutions offers a compliance pathway that allows states to realize the advantages of multistate and market-based solutions without mandating either strategy. With the common elements approach, states develop individual-state plans to achieve their unique emissions targets and give power plant owners the option to participate in cross-state emissions markets. Power plant owners can transfer low-cost emissions reductions between states whose compliance plans share common elements--credits defined the same way and mechanisms to protect against double counting. The common elements approach offers the following benefits: (1) allows cross-state credit transfers without states negotiating a formal regional trading scheme, (2) leaves compliance choices to power companies, (3) builds on existing state and federal trading programs, and (4) maintains the traditional roles of state energy and environmental regulators.

Author(s): Jonas Monast, Tim Profeta, Jeremy Tarr, and Brian Murray

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Environmental Markets

Climate and Energy

Clean Air Act

State Utility Regulation

State Policy

Policy Briefs

Completing the Energy Innovation Cycle: The View from the Public Utility Commission

Achieving a widespread adoption of innovative electricity generation technologies involves a complex system of research, development, demonstration, and deployment, with each phase then informing future developments. Despite a number of non-regulatory programs at the federal level to support this process, the innovation premium—the increased cost and technology risk often associated with innovative generation technologies—creates hurdles in the state public utility commission (PUC) process. This article in the Hastings Law Journal examines how and why innovative energy technologies face challenges in the PUC process, focusing on case studies where PUCs have approved or denied utility proposals to deploy high cost, first-generation energy technologies. It concludes with an outline of possible strategies to address PUC concerns by allocating the innovation premium beyond a single utility's ratepayers.

Author(s): Jonas Monast and Sarah Adair 

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Climate and Energy

State Utility Regulation

Environmental Economics

State Policy

Journal Articles

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