Traditionally, American energy markets have been regulated using a combination of antitrust law and public utility law: the former has predominated in oil markets and the latter in markets for natural gas and electricity. Over time, energy markets have grown increasingly complex and competitive, due partly to changing market conditions (for example, in oil markets) and partly to the regulation (in natural gas and electricity markets). Increasingly competitive energy markets meant increased risk for energy companies, who turned to energy derivatives as a way to hedge that risk. High energy prices and charges of manipulation in 21st-century energy markets have led regulators to a new approach, one that borrows from securities regulation and focuses attention and "manipulation and deceit" by energy market participants. However, the securities model may be a bad fit for energy markets, because reliance on this new approach exposes consumers to price risks associated with the exercise of market power by sellers, risks to which they were not subject under traditional approaches to regulation. Specifically, the securities regulation model overlooks important ways in which sellers can exert market power at the expense of consumers in the absence of fraud or deceit, partly because of the way securities case law interprets "manipulation," and partly because some of the common assumptions regulators employ about the ways in which market participants respond to price changes do not apply, or apply only weakly, in some energy markets. We explore the origins of these "bad fit" problems, and their implications, in this article.

US Energy Policy and the Pursuit of Failure is an analytic history of American energy policy. For the past forty years, the US government has tried to develop comprehensive policies on energy, yet these efforts have failed repeatedly. These failures have not resulted from a lack of will or funds but rather from an inability to differentiate between what could be undertaken and what could actually be accomplished. This book explains how and why various policy efforts have come about, shows why politicians have been eager to back them, and analyzes why they have inevitably failed. Over the past four decades, US energy policy makers have pursued not just policies that have failed but also a policy process that leads to failure.

This book dispels common myths about electricity and electricity policy and reveals how government policies manipulate energy markets, create hidden costs, and may inflict a net harm on the American people and the environment. Climate change, energy generation and use, and environmental degradation are among the most salient—and controversial—political issues today. Our country's energy future will be determined by the policymakers who enact laws that favor certain kinds of energy production while discouraging others as much as by the energy-production companies or the scientists working to reduce the environmental impact of all energy production. The Reality of American Energy: The Hidden Costs of Electricity provides rare insights into the politics and economics surrounding electricity in the United States. It identifies the economic, physical, and environmental implications of distorting energy markets to limit the use of fossil fuels while increasing renewable energy production and explains how these unseen effects of favoring renewable energy may be counterproductive to the economic interests of American citizens and to the protection of the environment. The first two chapters of the book introduce the subject of electricity policy in the United States and to enable readers to understand why policymakers do what they do. The remainder of the book examines the realities of the major electricity sources in the United States: coal, natural gas, nuclear, hydrodynamic, wind, biomass, solar, and geothermal. Each of these types of energy sources is analyzed in a dedicated chapter that explains how the electricity source works and identifies how politics and public policy shape the economic and environmental impacts associated with them.

Since the late 1980s, policy makers and regulators in a number of countries have liberalized, restructured or “deregulated their electric power sector, typically by introducing competition at the generation and retail level. These experiments have resulted in vastly different outcomes - some highly encouraging, others utterly disastrous. However, many countries continue along the same path for a variety of reasons. Electricity Market Reform examines the most important competitive electricity markets around the world and provides definitive answers as to why some markets have performed admirably, while others have utterly failed, often with dire financial and cost consequences. The lessons contained within are direct relevance to regulators, policy makers, the investment community, industry, academics and graduate students of electricity markets worldwide. Covers electicity market liberalization and deregulation on a worldwide scale Features expert contributions from key people within the electricity sector

Modem industrial society functions with the expectation that electricity will be available when required. By law, electric utilities have the obligation to provide electricity to customers in a "safe and adequate" manner. In exchange for this obligation, utilities are granted a monopoly right to provide electricity to customers within well-defmed service territories. However, utilities are not unfettered in their monopoly power; public utility commissions regulate the relationship between a utility and its customers and limit profits to a "fair rate of return on invested capital. " From its inception through the late 1970s, the electric utility industry's opera tional paradigm was to continue marketing electricity to customers and to build power plants to meet customer needs. This growth was facilitated by a U. S. energy policy predicated upon the assumption that sustained electric growth was causally linked to social welfare (Lovins, 1977). The electric utility industry is now in transition from a vertically integrated monopoly to a more competitive market. Of the three primary components (generation, transmission, and distribution) of the traditional vertically integrated monopoly, generation is leading this transformation. The desired outcome is a more efficient market for the provision of electric service, ultimately resulting in lower costs to customers. This book focuses on impediments to this transformation. In partiCUlar, it argues that information control is a form of market power that inhibits the evolution of the market. The analysis is presented within the context of the transformation of the U. S.

A comprehensive resource that provides the basic concepts of electric power systems, microeconomics, and optimization techniques Electricity Markets: Theories and Applications offers students and practitioners a clear understanding of the fundamental concepts of the economic theories, particularly microeconomic theories, as well as information on some advanced optimization methods of electricity markets. The authors—noted experts in the field—cover the basic drivers for the transformation of the electricity industry in both the United States and around the world and discuss the fundamentals of power system operation, electricity market design and structures, and electricity market operations. The text also explores advanced topics of power system operations and electricity market design and structure including zonal versus nodal pricing, market performance and market power issues, transmission pricing, and the emerging problems electricity markets face in smart grid and micro-grid environments. The authors also examine system planning under the context of electricity market regime. They explain the new ways to solve problems with the tremendous amount of economic data related to power systems that is now available. This important resource: Introduces fundamental economic concepts necessary to understand the operations and functions of electricity markets Presents basic characteristics of power systems and physical laws governing operation Includes mathematical optimization methods related to electricity markets and their applications to practical market clearing issues Electricity Markets: Theories and Applications is an authoritative text that explores the basic concepts of the economic theories and key information on advanced optimization methods of electricity markets.