Energy and Utilities Energy Regulations and Policy 2 — Questions and Answers
Question 1: What is a Regional Transmission Organization (RTO) or Independent System Operator (ISO)?
- A state public utility commission
- An independent entity that manages the electric transmission grid and wholesale markets in a region (Correct answer)
- A private utility company
- A federal reliability standard-setting body
Correct answer: An independent entity that manages the electric transmission grid and wholesale markets in a region
RTOs and ISOs are independent organizations that operate transmission systems, administer competitive wholesale markets, and ensure reliability across regions.
Question 2: What is a 'general rate case' in state utility regulation?
- A lawsuit against a utility for overcharging
- A comprehensive regulatory proceeding to set a utility's rates for the coming years (Correct answer)
- A FERC audit of interstate rates
- A class-action suit by ratepayers
Correct answer: A comprehensive regulatory proceeding to set a utility's rates for the coming years
A general rate case is a formal proceeding before a state public utility commission to determine the rates a regulated utility may charge customers.
Question 3: What does the Clean Power Plan / EPA's power sector greenhouse gas rules primarily aim to do?
- Mandate renewable energy use by consumers
- Reduce CO2 emissions from existing and new power plants (Correct answer)
- Ban natural gas pipelines
- Require utilities to install nuclear plants
Correct answer: Reduce CO2 emissions from existing and new power plants
EPA power sector rules under the Clean Air Act target CO2 and other greenhouse gas emissions from electric generating units to address climate change.
Question 4: What is 'fuel adjustment clause' or 'energy cost adjustment' on a utility bill?
- A penalty for high energy use
- A bill component that passes through changes in fuel costs directly to customers (Correct answer)
- A discount for customers using renewable energy
- A charge for meter reading services
Correct answer: A bill component that passes through changes in fuel costs directly to customers
Fuel adjustment clauses allow utilities to recover actual fuel and purchased power costs from customers outside the normal rate case process.
Question 5: Under US law, who has jurisdiction over retail electricity rates paid by consumers?
- FERC
- State public utility commissions (PUCs) (Correct answer)
- The US Congress
- The Department of Energy
Correct answer: State public utility commissions (PUCs)
Retail electricity rates are regulated by state public utility commissions, while FERC has jurisdiction over wholesale and interstate transmission rates.
Question 6: What is an 'integrated resource plan' (IRP) for electric utilities?
- A daily operations schedule for dispatch
- A long-term plan showing how a utility will meet future energy and capacity needs (Correct answer)
- An emergency response plan for outages
- A federal filing for new power plant permits
Correct answer: A long-term plan showing how a utility will meet future energy and capacity needs
An IRP is a long-range planning document that evaluates the mix of supply-side and demand-side resources to reliably and cost-effectively serve future load.
Energy and Utilities Energy Regulations and Policy 2
What is a Regional Transmission Organization (RTO) or Independent System Operator (ISO)?