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Until recently, states were permitted to have different 'new entrant ' and 'continuing recipient' income limits for parental Medicaid eligibility by implementing income disregards that changed with spell length. Some [...]

Advancing energy technology, increasing penetration of distributed energy resources, and climate change concerns are forcing a transformation of the electricity grid. And, this transformation is making the economic inefficiency of the current rate designs increasingly apparent. Today's typical rate designs not only fail to provide efficient price signals for electricity consumption, leading to inefficiently high capital expenditures and air pollution, but also fail to incentivize distributed energy resources, such as solar panels and energy storage, in a socially beneficial manner. As a result, reforming rates to accurately reflect the underlying costs, including external costs related to the emissions of greenhouse gases and other pollutants, is becoming an urgent endeavor. In this Article, we first explain how current electricity rate designs hamper economic efficiency because they break the link between price signals and underlying costs, especially the costs related to environmental externalities. Based on an economic framework, we highlight how better rate designs would improve economic efficiency, provide accurate price signals for distributed energy resources, and advance the seemingly conflicting interests of the relevant stakeholders. We provide a historical context to show that for almost 140 years of electricity rate design discussions, economic efficiency principles have mostly been ignored; yet, problems that stem from inefficient rate designs have continued to be salient. We then argue that the electricity sector is at a critical juncture, and that a shift to a paradigm with a long-term vision that includes better, economically efficient rate designs is necessary if we want to realize the clean energy future that the modern grid promises us. [ABSTRACT FROM AUTHOR]

Carbon dioxide (CO2) emissions impose a significant cost on society by contributing to climate change. The electricity sector is a major source of these emissions, yet their external cost is not fully reflected in electricity rates, and the market outcomes thus do not adjust to reflect those true costs--a classic market failure. This leads to emissions that are higher than optimal. Under the Federal Power Act (FPA), the Federal Energy Regulatory Commission (FERC) is tasked with ensuring that interstate wholesale electricity rates are "just and reasonable." Given the severity of the damages caused by the failure to internalize the CO2 externality, it is crucial to understand whether the external cost of that negative externality can be included in wholesale rates. This Article examines how FERC has embraced market efficiency as the key tool for ensuring just and reasonable rates and has addressed all of the standard market failures that would otherwise distort the efficiency of prices: market power, asymmetric information, public goods, and externalities. The Article then shows that any economically rational effort to achieve an efficient market must attempt to address the external cost of CO2 emissions as well. This Article argues that, from an economic perspective, FERC's authority to pursue market efficiency should extend to either approving utility plans to internalize those external costs or to set a carbon price, just as it extends to other market failures. FERC's authority in this area has its limits. Under the FPA's just and reasonable mandate, FERC has authority to address only the market failures that are directly related to wholesale electricity rates. In addition, FERC cannot act without evidentiary support or act directly to interfere in state-level generation mix choices. But seen from an economic perspective, there should be no impediment to FERC taking action to internalize the direct costs of greenhouse gas emissions--whether through approval of a utility's plan to take those costs into account or through a market correction issued by FERC itself. [ABSTRACT FROM AUTHOR]

Recent advances in technology and the consequent decline in manufacturing costs are making energy storage systems a central element of energy and climate change policy debates across the nation. Energy storage systems have the potential to provide many benefits such as lower electricity prices at peak demand times, deferred or avoided new capacity investments, and reduced greenhouse gas emissions. Indeed, both federal and state policymakers are enthusiastically encouraging more energy storage deployment with the belief that energy storage systems will help reduce greenhouse gas emissions from the electricity sector by making intermittent and variable renewable energy resources such as solar and wind more attractive. This Article challenges the common assumption that increased energy storage will necessarily reduce greenhouse gas emissions. We first explore the conditions under which energy storage systems can cause an increase in greenhouse gas emissions contrary to the intent of policymakers. As policymakers start to rely more heavily on energy storage systems to achieve clean energy goals, this insight is crucial to inform stakeholders in the energy and climate policy debates. Next, we show that the current regulatory and policy landscape falls short of providing sufficient incentives for a desirable level of deployment of energy storage or sufficient safeguards to ensure that more energy storage deployment is indeed environmentally beneficial and economically efficient. Last, we suggest policy reforms that can correct these inefficiencies and discuss the jurisdictional roles that state and federal regulators have in implementing these reforms. [ABSTRACT FROM AUTHOR]

As distributed energy generation is becoming increasingly common, the debate on how a utility's customers should be compensated for the energy they sell back to the grid is intensifying. And net metering, the practice of compensating for such energy at the retail rate for electricity, is becoming the subject of intense political disagreement. Utilities argue that net metering fails to compensate them for grid construction and distribution costs and that it gives rise to regressive cost shifting among customers. Conversely, solar energy proponents argue that the compensation should be higher than the retail rate to account for other benefits that distributed generation systems provide, such as greenhouse gas emission reductions, improved air quality, and reduced utility spending on new capacity installations. This ongoing debate is leading to significant changes to net metering policies in many states. This Article provides a thorough analysis of benefits and costs of distributed generation. It also highlights the analytical flaws and missing elements in many of the competing positions and existing state policies. We propose an alternative approach that properly recognizes the respective contributions to the electric grid of utilities on the one hand and of distributed generators on the other. We show, however, that this policy is second-best as a result of certain constraints on how electricity can currently be priced. For the longer run, when these constraints might no longer be present, we discuss the need to consider net metering as part of a more comprehensive energy reform that would ensure the efficient integration of all types of distributed energy resources into the electricity grid. These reforms are needed to secure our Nation's clean energy future. [ABSTRACT FROM AUTHOR]