ELCON was formed in the aftermath of the Energy Crisis that began In October 1973 when Egypt and Syria attacked Israel on the Jewish holy day of Yom Kipper. Soon thereafter, the Soviet Union sent arms to Egypt and Syria that provoked President Nixon to pledge $2.2 billion in aid to Israel. In response, Libya, Saudi Arabia and other Arab OPEC states embargoed all US-bound oil. The embargo occurred at the same time the OPEC states were otherwise reducing production with the intent of increasing global oil prices. While the Yom Kippur War ended quickly in late October and a cease-fire agreement between Israel and Egypt signed the following month, the embargo was not lifted until March 1974. During the embargo, OPEC increased oil prices from under $2 per barrel to $12 ($64 in 2016 dollars) and they remained at those high levels after the embargo was lifted. The immediate result in the US was severe price hikes for gasoline and other oil products and fuel shortages.
Electric utilities were especially exposed to the oil crisis. Since enactment of the Clean Air Act of 1970, and in response to exceptional high growth in demand, they had increased their use of low-sulfur oil from the Middle East to generate electricity. Fearing consumer (and political) backlash in passing through in rates the higher oil prices, one of the nation’s largest utilities at the time, Con Ed, eliminated its April 1974 dividend—an unprecedented action by a regulated US utility. Other utilities (and their state regulators) were not as generous. State ratemaking policies began to abandon rate designs based on cost of service and shift a greater burden for the higher fuel costs onto industrial consumers of electricity establishing what became known as cross-class subsidization. Other ratemaking policies were advocated before state public utility commissions to achieve other social purposes, which also needlessly increased the energy costs of US manufacturers.
At the same time, President Ford (and later President Carter) and Congress began focusing on changes to domestic energy policies with broad consequences. For example, in 1974, Congress established the Federal Energy Administration (FEA), the first US agency with the primary focus on energy and mandated it to collect, assemble, evaluate, and analyze energy information. The FEA was also responsible for managing federal programs for energy research and development. In 1975, Congress also enacted the Energy Policy and Conservation Act, which mandated increased car fuel efficiency, created the Strategic Petroleum Reserve, banned the export of crude oil, imposed oil price controls, promoted domestic coal production, and established the first major federal programs and regulations on energy conservation. Other legislative proposals were in play that would require all electric utilities to adopt various ratemaking reforms.
The Creation of ELCON
Like most large industrial or commercial ratepayers, and unlike residential ratepayers, ELCON member manufacturing facilities were served by their local utility under a two-part tariff consisting of a demand charge to recover fixed costs incurred by the utility to serve the customer and an energy charge to recover variable costs such as fuel. ELCON members would factor in this rate structure in the design and operation of their facilities to minimize both charges. Hence ELCON member facilities tend to have very high load factors resulting in the fact that the average rate they pay their utility is lower than the average rate payed by lower load factor ratepayers such as residential consumers. The fairness of this fact was little understood or appreciated by the public and many policy makers.
In the aftermath of the oil embargo political pressures increased to (1) shield residential ratepayers from the full effect of fuel price increases and (2) to redesign rate structures to discourage consumption. The policy recommendations included: (1) the elimination of declining block tariffs (which were deemed “promotional”) and replacing them with increasing block tariffs and (2) time-of-use rates based on “marginal costs.” At the time, most ratepayers were served under declining block tariffs because this rate design captures the fact that once fixed costs are recovered, the average rate tends to decline with increased usage. It is a cost-based rate structure. Opponents of this rate structure argued that an increasing block tariff—that artificially imposed higher rates on bigger users of electricity—would promote conservation. Lifeline rates for residential ratepayers was a form of increasing block rate structure with a targeted subsidy based on the consumption level of a residential household. Higher charges on industrial ratepayer bills would pay for the subsidies. Typically the rate design consisted of two blocks with the initial block of energy consumption (e.g., 500 kWh/month) having a heavily subsidized rate and the second (“tail”) block having a much higher rate. The intent of lifeline rates—as the name suggests—was to improve affordability for the poor, promote universal access and (for consumption in the tail block) encourage conservation. It was never clear at the time that quantity-based consumption subsidies achieved the intended benefits to the poor because poor households were not necessarily frugal energy consumers. On many utility systems the lifeline initial block was a huge windfall to families with second homes.
Rates based on time-of-use were also widely promoted and this encouraged wide public debate on the merits of designing rates based on estimated “marginal costs.” In practice, the marginal cost was a highly simplistic construct taken from introductory economics. There was some confusion regarding whether short-term or long-term marginal cost was the appropriate measure, and in the case of long-term marginal costs, the rate designers had to base their computations on unknown future costs often using hypothetical power plant configurations. These projections were prone to the biases of regulatory staff and consumer advocates who were not always sympathetic to the US manufacturing community. Another serious problem was the fact that rates based on marginal costs tended to over-collect the utility’s revenue requirement requiring arbitrary adjustments. Large manufacturers were not convinced that the resulting rate was any better than a time-of-use (TOU) rate based strictly on actually incurred costs.
In the summer of 1975 a small group of executives representing large industrial consumers of electricity met to consider the formation of an “Industrial Power Consumers Council” or IPC. The name was later changed to “The Council of Industrial Power Consumers.” The companies most actively involved were Union Carbide Corporation, AIRCO Inc., Stauffer Chemical Company, Monsanto Company, FMC Corporation, Air Products & Chemicals, General Motors Corporation, Hanna Mining Company, and PPG Industries Inc. They were particularly concerned that “[e]lectric power rate structures appear to be in for major revamping.” They singled out several proposed bills in Congress that would “prohibit unjustified differences in rates to different classes of consumers” as examples of energy policies that promote cross-class subsidization.
On January 15, 1976, the organizational meeting of the “Electricity Consumers Resource Council” (ELCON) was convened in Washington DC. Attendees included David J. Craig (AIRCO Inc.), Edward V. Sherry (Air Products & Chemicals), Harold J. Newman (Allegheny Ludlum Industries), Charles B. Herman (FMC Corporation), Chester L. Knowles, Jr. (Olin Corporation), George L. Cobb (PPG Industries), and James C. Malone (Union Carbide). Also present was Philip A. Fleming of the law firm Jones, Day, Reavis & Pogue who was asked to assist in the organization of the new association. Mr. Craig announced that ELCON was being formed as an unincorporated, 501(c) (6) non-profit association. As stated in the proposed Articles of Association:
The purpose of ELCON is to promote by all lawful means the development and adoption of coordinated, rational and consistent federal, state and local policies that will assure an adequate and reliable supply of electricity for all users at price based upon the costs incurred in serving customers … .
All seven companies agreed to support and signed the Articles of Association. Mr. Craig was elected ELCON’s first chairman and Ronald S. Wishart of Union Carbide was elected Executive Director Pro Tem and Secretary-Treasurer. Mr. Wishart would lead the organization until a permanent executive director was hired. The group also established the following standing committees: Technical Committee, Communications Committee, Legal Committee, and Government Liaison Committee. A State Relations Committee and a Federal Relations Committee would later replace the Government Liaison Committee. Mr. Fleming of Jones Day was designated the organization’s legal counsel. [In 1979 Fleming became partner at the firm Crowell & Moring and would continue as ELCON’s General Counsel until 1988.]
ELCON’s membership expanded in the months to follow and regular Board and Member Meetings were scheduled. At the October 1976 Member Meeting it was reported that ELCON representatives had met with officials at the Federal Energy Administration (FEA) and that ELCON staff was in the process of introducing the organization to various state industrial groups. Mr. Wishart reiterated ELCON’s mission as a national voice for major industrial electricity users. He identified the following key priorities: (1) preparation of materials on lifeline rates; (2) preparation of materials that demonstrate that cost-of-service principles “do not place unfair financial burdens on residential ratepayers;” (3) continue to liaison with FEA; (4) preparation of a response to the New York Public Service Commission’s decision advocating marginal cost pricing; and (5) the development of materials on load management, peak load pricing, time-of-day rates, fuel supply, and coal policy. It was also reported by the chairman of the Government Liaison Committee that Congressman John Dingell (D-MI), Philip R. Sharp (D-IN) and others have introduced an electric rate reform bill.
At the December 1976 Member Meeting it was reported that the Executive Director Search Committee was in the final stages of negotiation with Dr. Jay B. Kennedy to be ELCON’s new executive director. Dr. Kennedy was a professor of economics at the University of South Florida and was formerly Staff Director of the Florida Public Utilities Commission. The members approved the hire of Dr. Kennedy effective January 15, 1977. Dr. Kennedy would lead ELCON during its important formative years.
In August 1977, Congress passed the Department of Energy Organization Act (P. L. 95-91). The Act consolidated all federal energy agencies under the new cabinet-level Department of Energy (DOE).
PURPA Title I
Federal Ratemaking Standards
On April 20, 1977, President Jimmy Carter submitted his National Energy Plan (NEP) to Congress. NEP consisted of 113 specific legislative and administrative proposals that were designed to establish a comprehensive national energy policy and address the country’s dependency on foreign imported oil. In November 1978, Congress responded by enacting five pieces of legislation, collectively known as the National Energy Act of 1978 (NEA):
- Natural Gas Policy Act (NGPA), P. L. 95-621
- Public Utility Regulatory Policies Act (PURPA), P. L. 95-617
- Energy Tax Act (ETA), P.L. 95-618
- Powerplant and Industrial Fuel Use Act (Fuel Use Act), P. L. 95-620
- National Energy Conservation Policy Act (NECPA), P. L. 95-619
The NEA mandated energy efficiency programs, tax incentives, tax disincentives, energy conservation programs, alternative fuel programs, and a variety of regulatory and market-based initiatives. While each of the five acts would to some degree impact ELCON members, it was PURPA that would especially dominate ELCON’s work load. Title I of PURPA established a variety of federal ratemaking and regulatory standards, including guidelines for lifeline rates and cost-of-service data requirements. The federal ratemaking standards addressed cost of service, load management techniques (including interruptible rates), declining block rates, time-of-day rates, and seasonal rates. While the standards in Title I were federal standards, the act allowed each state only to consider implementing the standard in a classic example of cooperative federalism.
At ELCON’s November 1978 Board Meeting the Directors approved a recommendation that ELCON’s Legal Committee develop a program “to disseminate information and advice regarding state rate case implications of PURPA” for the benefit of the attorneys who represent industrial ratepayers interests at the state level and other attorneys. In January 1979 the membership endorsed “the concept of developing standardized, prepared ELCON testimony and exhibits to use in state rate proceedings” in which each PURPA standard was adjudicated. The “packaged” testimony was completed in July 1979. Originally the intent was that ELCON would provide the written material for the use of the attorneys representing the local industrial group. The terms of engagement was dictated under an ELCON policy, “Procedure for ELCON Participation in State Regulatory Proceedings.” But once the states started to act on the federal mandate it became apparent that in many cases ELCON would directly intervene to make its case and ELCON staff—particularly Dr. Kennedy—would be the expert witness sponsoring the prepared testimony. By 1982, ELCON had submitted testimony in over 40 states!
In 1979 ELCON submitted its first comments to the Federal Energy Regulatory Commission (FERC) in response to the agency’s pending implementation of PURPA section 133.
Me. Wishart and Dr. Kennedy initiated a series of ELCON publications entitled Profiles in Electricity Issues that defended ELCON members’ positions on the PURPA standards and other critical issues of the time:
- How Equitable are Electricity Rates Between Industrial and Residential Consumers, Profile No. 1, February 1977
- What would be the Economic Impact of Increasing Industrial Electric Rates above Cost of Service? Profile No. 2, June 1977
- How Should Changes in Fuel Cost Affect the Electricity Customer’s Bill? Profile No. 3, July 1977
- Time-of-Use Rates, Profile No. 4, January 1978
- Declining Block Rates, Profile No. 5, July 1978
- Cost-of-Service Survey, Profile No. 6, November 1978
- Are Lifeline Rates the Only Way to Help the Needy Pay Their Electric Bills? Profile No. 7, February 1980
- Residential Conservation Programs, Profile No. 8, May 1981
- Should CWIP be Included in an Electric Utility’s Rate Base? Profile No. 9, July 1981
- Vintage Pricing, Profile No. 10, May 1984
During Dr. Kennedy’s tenure, ELCON also published a series of white papers, background reports and assessments of a more educational nature with the intent of informing policy makers on important issues affecting industrial rates and ratemaking policies. These documents were prepared under contract with industry experts or by ELCON staff:
- Economic Impact of Increasing Industrial Electric Rates Above Cost of Service, Prepared by Jensen Associates, Inc., May 1977
- A Critical Review of “Electricity Pricing and Load Management: Foreign Experience and California Opportunities, Rand Corporation, March 1977,” Prepared by Londwatt Consultants Ltd (London England), January 1978
- An Examination of the Concept of Using Relative Customer Class Risk to Set Target Rates of Return in Electric Cost-of-Service Studies, Prepared by FINCAP, Inc., October 1981
- A Background Paper of Acid Rain: Causes, Effects and Cures, March 1983
- The Classification and Allocation of Electric Utility Production Capacity Costs, Prepared by Drazen-Brubaker & Associates, June 1983
- Industrial Cogeneration: A Background Paper, June 1983
- Issues Facing Industrial Cogenerators: Rates for Sales and Rates for Maintenance, Standby and Supplemental Power, February 1984
- Canadian Hydropower: Potential Resources and Implications for US Industrial Competitiveness, Prepared by William A. Vaughan, July 1987
In March 1980, ELCON’s General Counsel alerted the organization to the publication of a notice in the Federal Register regarding the rulemaking for PURPA Title II on cogeneration. ELCON staff was directed to investigate the issue and report back to the ELCON board.
As PURPA Title I activities in the states reached their inevitable conclusions, some ELCON members openly speculated that ELCON would cease to exist in two or three years. During the February 1982 ELCON Annual Meeting, Dr. Kennedy challenged that view stating that he saw renewed emphasis on electricity issues at the federal level. The financial health of utilities would continue to be an important issue for ELCON because of the unprecedented cost overruns at nuclear power plants. Other issues included diversification and deregulation of utilities, repeal of Public Utility Holding Company Act of 1935 (PUHCA), vintage pricing, capital substitution, and cogeneration would sustain the organization.
Nuclear Plants and Regulatory Failure
Throughout the 1980s and 1990s, state (and to a lesser extent federal) regulatory policies affecting electric utilities were primarily driven by efforts to develop a huge fleet of nuclear power plants, the subsequent cancellation of most of those plants and retribution in the form of greater regulatory role in the planning of the utility system. ELCON deemed the situation a classic example of regulatory failure and its members reacted by seeking a greater role for competition in the electric sector. It would take ELCON almost a decade to defined (and support) the appropriate role of competition in the heavily regulated electric utility industry.
In 1983, ELCON’s Technical Committee was working on the following issues: demand ratchets, cost of cancelled plants, utility load growth, nuclear waste, cost of regulation, nuclear licensing, CWIP, vintage pricing, PUHCA, interruptible rates, and cap-sub. A year later, in the face of a clear breakdown of trust in state regulatory policies, the organization began an investigation of the technical conditions necessary for an industrial electricity buyer to secure a “wheeling order,” i.e., the opportunity to access power from alternative suppliers. But ELCON was not yet ready to give up on traditional cost-of-service regulation. There still was a role for utilities. In an effort to promote traditional principles of ratemaking, ELCON developed the Fundamentals of Ratemaking, a slide presentation used to explain how rates should be set to balance the interests of utility shareholders and ratepayers. It was also converted into a video presentation.
In 1984, Dr. Kennedy retired from ELCON to found J. Kennedy & Associates, a consulting firm based in Atlanta, Georgia. On October 17, 1984, the ELCON Board of Directors selected Dr. John A. Anderson as ELCON’s new Executive Director. Dr. Anderson had been a member of the ELCON staff as Senior Economist since September 1980. Dr. Anderson would lead the organization throughout the entire era of electric industry restructuring.
One flash point for ELCON members was the adoption by many states of an expansive role for state regulators with the planning of their jurisdictional utility systems. Originally called “least-cost planning,” but later changed to “integrated resource planning” or IRP, the new planning paradigm required consideration of energy conservation measures as substitutes for traditional supply-side measures such as power plants. Many states mandated Demand Side Management (DSM) programs funded by utility ratepayers. ELCON members were particularly enraged by these programs in states where utilities had excess capacity and recent rate increases resulting from the phase-in of new nuclear power plants. Historian Richard F. Hirsh in his book, Power Loss, on the history of the origins of deregulation and restructuring in the electric utility industry noted ELCON’s concerns:
As large users of power, industrial consumers understandably took issue with DSM programs that increased costs. Through the Electricity Consumers Resource Council (known as ELCON), an association of large industrial power users founded in 1976, these customers denounced DSM and IRP programs that, they believed, forced them to subsidize other customers. Employing the economic arguments made by DSM critics, ELCON’s executive director, John Anderson, and the organization’s director of technical affairs, John Hughes, asserted in 1990 and 1991 that market failures should not be addressed with government intervention and mandatory energy-efficiency programs. Rather, utilities and other parties should provide information for helping consumers choose conservation strategies of their own. But these information programs did not need to be directed to large users of power, who were already sophisticated buyers capable of understanding the economic intricacies of choosing cost-effective energy-efficiency equipment. Big customers also had access to cheaper money than did other classes of consumers. Consequently, ELCON spokesmen argued, large consumer would be less likely to suffer from market failures than would small customers. They therefore saw less value in utility-sponsored DSM programs.
ELCON Profiles published during this period of disenchantment captured the situation:
- Cost Allocation of Cancelled Electric Power Plants, Profile No. 11, September 1984
- Fuel Adjustment Clauses, Profile No. 17, April 1992
- Electricity Utility Cost Recovery of New Plant Additions—Phase-In, Profile No. 12, May 1985
- Competitive Bidding, Profile No. 13, April 1990
- Demand Side Management (DSM), Profile No. 14, December 1990
- Integrated/Least-Cost Resource Planning, Profile No. 15, April 1991
- Externalities, No. 16, Profile October 1991
- Fuel Adjustment Clauses, Profile No. 17, April 1992
Retail Wheeling and Industry Restructuring
In 1985, FERC initiated a Notice of Inquiry (NOI) (“Regulation of Electricity Sales-for-Resale and Transmission Service”) “to evaluate its present policies toward wholesale electricity transactions and transmission service” and specifically “how its policies promote, or whether they impede, efficiency in electricity markets and to determine whether there are available alternatives.” FERC also sought comments on inter-utility coordination services (interchange transactions and economy energy sales) and open-access transmission as a “necessary element to competitive electricity markets.” Finally, the NOI requested comments on marginal cost pricing as an alternative to average embedded cost of service.
The NOI would launch ELCON’s first major engagement on FERC-jurisdictional wholesale regulation. ELCON used the opportunity created by the NOI to begin an extensive debate within the organization on the merits of wheeling as a precursor to a competitive power industry and the degree to which large industrials could, as a practical matter, get regulatory approval to bypass their local utility. The NOI produced no direct outcome—no policy statement or proposed rules emerged from this effort—but it fanned the flames of interest in restructuring in at least the FERC-jurisdictional wholesale electricity markets.
In 1987, FERC hosted a series of four regional conferences on the implementation of PURPA. Topics included avoided cost calculations, state implementation, QF qualification criteria, and access by QF to the transmission system. Later in the year FERC issued a background paper announcing its intent to issue five proposed rulemakings. Two would be on competitive bidding and independent power producers (IPPs), respectively. Others would be on avoided costs and other aspects of PURPA implementation.
In 1988, FERC issued three Notice of Proposed Rulemakings (NOPRs) on: (1) administrative determination of avoided costs (ADFAC); (2) regulations governing competitive bidding programs; and (3) regulations governing independent power producers (IPPs). These rulemakings were the direct outcome of the successful results of PURPA Title II implementation.
Concurrent with the debate generated by the NOI, the technical conferences, and the three NOPRs, ELCON developed a formal position on “wheeling” that was codified in two special reports both entitled “Electricity’s Future.” An important motivating factor for taking this position was the positive experience many ELCON members had with the deregulation of natural gas industry, and that experiences strongly influenced the type of “deregulation” ELCON would advocate in the electric industry. The first special report was published in 1987 and the second in 1989. The main difference between the two was the second one included a Q&A section that clarified ELCON’s position on what was called retail wheeling.
ELCON played a leadership role in the passage of the Energy Policy Act of 1992 and the restructuring debate that ensued soon after passage. It was somewhat remarkable that the modest federal reforms mandate in wholesale electric markets by EPAct were quickly followed by more radical proposals at the retail level by certain states. Historian Richard F. Hirsh noted ELCON’s contribution:
… [L]obbyists for the Electricity Consumers Resource Council (ELCON) played a major role throughout the legislative process to obtain open transmission access for independent power producers, hoping that more competition would lower the price of electricity. While declaring the transmission provisions of the law “a major step forward,” ELCON’s executive director John Anderson observed that his organization was “very unhappy” about the bill’s restriction on retail wheeling. Nevertheless, because of Anderson’s efforts, the final language of the law allowed states to introduce retail competition themselves.
As the retail restructuring debate evolved, ELCON published a series of position papers staking out the organization’s recommendations:
- Retail Competition in the US Electricity Industry: Eight Principles for Achieving Competitive, Efficient and Equitable Retail Electricity Markets, A Special Report, June 1994
- Blueprint for Customer Choice: Road Map for the Transition, February 1996
- Competition Can Enhance Bulk-Power Reliability, Profile No. 19, June 1997
- Policy Choices for Electric-Utility Stranded Costs, Prepared by Eric Hirst, July 1998
- Bulk-Power Ancillary Services for Industrial Customers, Prepared by Eric Hirst, June 1999
But by the turn of the century, ELCON began to question the success of the restructuring experiment. Only about half the states bought into the program and many jurisdictional issues were never resolved between the states and FERC. This created a hybrid market structure that was prone to pricing volatility and the exercise of market power, and little long-term investment. The 2000-2001 California energy crisis was symptomatic of these problems and the ensuing backlash severely hobbled efforts at both the federal and state levels to develop a workably competitive electric market. Two ELCON white papers documented the organization’s concerns:
- Eliminating Market Power in the Transition to Competition, Profile No. 21, July 1999
- Preventing Market Failures on the Road to Competition, A Special Report, May 2001
- Problems in the Organized Markets, A Special Report, April 2005
ELCON also had much to say about independent grid operation. The early concept of Independent System Operators (ISOs) was strongly supported by ELCON in its Profile issued in early 1997, but the FERC mandate establishing Regional Transmission Organizations (RTOs) and subsequent experience with the first RTO—the PJM Interconnection—challenged the organization’s faith in FERC’s tutelage of the federal restructuring effort. The flaws of RTOs were documented in a follow-up Profile issued two years later:
- Independent System Operators, Profile No. 18, March 1997
- Regional Transmission Organizations, Profile No. 20, March 1999
The Post-Restructuring Era
Beginning in the mid-2000s, it was evident that the restructuring effort had reached a dead end and was, at best, only partially successful. Some states that were early leaders of the restructuring effort were increasingly unhappy with the larger regulatory role usurped by FERC. They also believed that states were better positioned to implement new environmental policies intended to address climate change, regional haze and mercury. Several large industrial states began to return to the “central planning” type paradigm that was largely abandoned at the beginning of the restructuring era and once again mandate utility programs promoting energy-efficiency and renewable energy resources. Utilities are often given substantial financial incentives (in form of revenue decoupling and performance-based regulation) in return for sponsoring these programs—at great cost to the utilities’ customers. ELCON issued a series of position papers that attempt to rein in the cost of these efforts:
- Performance-Based Regulation, Profile No. 22, August 2000
- Revenue Decoupling, January 2007
- Utility Energy Efficiency Programs: Too Cheap to Meter? November 2008
- Allocation of Costs for Renewable Energy, July 2009
- Revenue Decoupling and Its Alternatives: An Intervener’s Guide to Retail Ratemaking Policies on Decoupling, August 2009
- Financing Clean Energy Investments of Large Industrial Customers: What is the Role of Electric Utilities? November 2010
- Regulatory Treatment of Uneconomic Power Plants, July 2016
In 2011, the ELCON membership identified the following issues as the organization’s priorities: (1) cost allocation of new or enhanced transmission based on “beneficiary pays” (i.e., cost of service); (2) the cost effective implementation of Smart Grid; (3) vesting NERC with responsibilities for cybersecurity; (4) opt-out policy regarding state conservation mandates; (5) opposition to revenue decoupling; (6) support for treatment of demand response on comparable basis to generation; (7) elimination of barriers to combined heat and power (CHP) and re-establishment of the purchase obligation; (8) encourage FERC to ensure that the organized markets promote competition and deliver quantifiable net benefits to consumers; (9) organized markets should be structured as “energy only,” but if capacity markets are established, the market clearing price should be determined by competitive market forces rather than administratively determined mechanisms; (10) only facilities that have a material impact of the Bulk Electric System should be registered in the NERC Compliance Registry and subject to mandatory NERC Reliability Standards; (11) regardless of the fuel or source, electricity should be generated in the most efficient, cost effective and reliable manner with full recognition of the costs incurred in integrating the source with the interconnected grid; and (12) any proposal to address greenhouse gas emissions must take into account the total direct and indirect costs such a mechanism would have on US manufacturers given their position in international markets.
One bright spot in recent years has been the institutionalization of demand response at the federal level. For decades, many ELCON members took advantage of interruptible rates or tariffs that reduced their energy bills in return for load curtailments that lowered utilities’ dispatch costs or prevented emergency conditions. This retail service tended to disappear with the creation of ISOs and RTOs, but after a long fight with strong ELCON support, FERC finally required its jurisdictional ISOs and RTOs to offer the service at the wholesale level with compensated on the same basis as generation. In January 2016, the US Supreme Court reaffirmed FERC’s jurisdiction to do so in a major victory for all electricity consumers.