FERC Upholds Electricity Federalism
As R Street senior fellow Josiah Neeley explains, “Granting the petition would have meant a massive usurpation of traditional state authority by the federal government. It is rare that a federal agency decides not to expand its own power but, in this case, FERC wisely decided that states were better equipped to handle these issues.”
Devin Hartman, R Street’s Director of Energy and Environmental Policy adds: “FERC should be applauded for upholding energy federalism. We can now focus on distributed energy policies that enhance competition, customer choice, transparency and electric reliability. Federal and state regulators each have proper roles in this, and today’s decision clarifies that states are in the driver’s seat for valuing distributed energy.”
Cooperative federalism for distributed energy resource (DER) policy will continue to grow as DER deployment increases. “It is important that states look broadly at all available tools to identify the best way to value the benefits DERs bring to the system,” says R Street associate fellow Chris Villarreal, who led R Street’s comments at FERC and authored the DER manual for the National Association of Regulatory Utility Commissioners. In both pieces, Villarreal evaluated the economic considerations for net energy metering (NEM), the most common state policy for compensating DERs that was at the heart of the petition before FERC.
Finally, he notes: “While not perfect, NEM should be thought of as one step toward a more appropriate way for valuing and compensating DERs. This is an opportunity for state regulators, utilities and stakeholders to roll-up their sleeves and begin planning for the evolution of NEM and DER policy overall.”
