Ari Peskoe Ranks Governance, Footprint, and Market Design
Jul 11, 2024
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Ari Peskoe, Director of the Electricity Law Initiative at Harvard Law, dives deep into the intricacies of U.S. power sector regulation. He critiques existing governance structures of electric utilities and argues for modernized frameworks to foster innovation. The discussion sheds light on incentive regulation and procedural justice, emphasizing transparency and stakeholder engagement. Peskoe humorously compares stagnant monopolies in the industry to the Jedi Council, underlining the urgent need for reform amidst climate challenges.
Ari Peskoe emphasizes the critical need for governance reforms within regional transmission organizations to foster competition and innovation in the energy sector.
The discussion highlights the distinction between cost of service and incentive-based regulation, advocating for frameworks that motivate utilities to exceed performance standards for better efficiency.
Elmaz underscores the importance of procedural justice in energy governance, advocating for transparent stakeholder participation to ensure equitable decision-making and energy access.
Deep dives
Introduction of Hosts and Their Expertise
The episode introduces three hosts, including Paul Dockery, who focuses on resource strategy and planning within Seattle City Light, Dr. Almaz Nagesh, an analyst at Tacoma Power with a keen interest in energy justice, and Dr. Farhad Bilimoria, an expert in electricity markets at S&P Global. They express excitement over their varying backgrounds and share personal achievements, highlighting the dynamic nature of their conversations. This camaraderie sets the stage for an engaging discussion centered on energy governance and regional transmission organizations (RTOs). The group wishes another member, Conley, a speedy recovery, underlining the collaborative community ethos among them.
Discussion on Energy Governance and RTOs
The focus shifts to the intricate governance of regional transmission organizations, with an interview featuring Ari Pesco from Harvard Law School. The hosts note Pesco’s reputation as a significant figure in energy regulations, particularly regarding U.S. power sector policies. They emphasize the importance of understanding governance structures, which are seen as vital for stimulating innovation in the energy sector. The hosts convey their appreciation for Pesco's expertise while preparing listeners for a deep dive into complex regulatory discussions.
Theoretical Foundations of Regulatory Frameworks
A segment introduces '30 seconds of theory,' where Farhad explains the distinction between cost of service and incentive regulation. This discussion contextualizes how energy monopolies are regulated, focusing on the necessity for frameworks that incentivize better performance among utilities. Traditional cost of service approaches determine allowable earnings based on examined costs, but they lack motivation for efficiency and innovation. In contrast, incentive regulation encourages exceeding performance standards, and this debate is pivotal for understanding the future regulations in the energy sector.
Exploration of Procedural Justice and Stakeholder Engagement
Elmaz discusses procedural justice, highlighting its significance in energy governance, particularly regarding stakeholder participation in decision-making processes. To ensure fairness, transparency and actual influence of public opinion in decisions are vital, contrary to merely inviting stakeholders to observe predetermined outcomes. The linkage of procedural justice to energy justice principles demonstrates that enhancing stakeholder engagement is essential for effective governance and equitable energy access. This segment underscores the need for transparent practices to better reflect the diverse voices in energy policy discussions.
Ari Pesco's Views on Utility and RTO Dynamics
Ari Pesco critiques how the influence of incumbent utilities affects governance within regional transmission organizations. He notes that many RTOs were established in a way that still favors traditional utilities, which hinders potential innovation and adaptation needed in the rapidly changing energy landscape. The conversation brings to light the historical context of decision-making power retained by these utilities over essential areas like transmission planning. These insights indicate the importance of reassessing governance structures to enhance competition and investment opportunities from diverse market actors.
The Need for Governance Reform to Enable Innovation
The discussion emphasizes the urgent need for governance reform within RTOs to facilitate the integration of new technologies and a variety of energy resources. Without adequate regulatory frameworks, existing organizations may perpetuate outdated models that stifle innovation and hinder advancement toward a sustainable energy future. Pesco and the hosts agree that more robust and independent governance could better enable competition, innovative project development, and ultimately a more efficient energy landscape. This focus on reform is framed as essential to meeting the escalating demands for renewable energy and modernization of the electric grid.
Ari Peskoe describes himself as an electric utility critic and has advice for electric utility enthusiasts.
Ari Peskoe is the Director of the Electricity Law Initiative at the Harvard Law School Environmental and Energy Law Program and a prolific writer about regulation of the U.S. power sector on issues ranging from constitutional challenges to states’ energy laws to interstate transmission development. The interview is wrapped in commentary from co-hosts Paul Dockery, Ahlmahz Negash, and Farhad Billimoria.
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03:11 - 30 seconds of theory
Farhad on Cost of Service vs Incentive based regulation
Jenkins, K., McCauley, D., Heffron, R., Stephan, H. and Rehner, R., 2016. Energy justice: A conceptual review. Energy research & social science, 11, pp.174-182.
11:01 - Ari Peskoe on Governance
11/01/2023 - CleanLaw Podcast - Electricity Law Initiative
51:10 - Ranking Governance, Configuration, and Market Design
59:37 - Ari Peskoe’s Energy System Analogy
1:04:48 - Debriefing on transmission, governance, and public power with Ahlmahz Negash and Farhad Billimoria
Public Power Underground, for electric utility enthusiasts! Public Power Underground, it’s work to watch!
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