The Institute for Policy Integrity produces a variety of publications. Our research reports develop in-depth research on our core issues, while our policy briefs and issue briefs provide focused analysis on more timely or particular topics. Our academic articles and working papers offer original scholarly research and analysis from established experts as well as fresh new voices.
This study investigates residential solar plus storage (SS) adoption decisions in California amid the dual risks of wildfires and the associated power outages. Using city-level monthly data from 2018 to 2020, I show that a one-percent increment in Public Safety Power Shutoff (PSPS) events led to a 0.057-0.088% rise in applications for SS system and a 0.29- 0.518% cost uptick in the following two months. Outside of High Fire Threat Districts (HFTD), individuals mainly adopted third-party-owned SS systems as short-term solutions to perceived power outage risks, whereas their responses were deterred by the intensity of concurrent wildfires. As latent wildfire hazards increase in HFTD, recent wildfires conveyed less new risk information to dissuade individuals’ averring behavior, while the concerns about power outage risks were overshadowed by preexisting perceptions of latent wildfire threats.
The devastating 2021 blackout in Texas, among others, has highlighted the need to reform electricity markets to make them resilient to extreme weather events. In this paper, we review related efforts by system planners and operators within electricity market contexts, focusing on Europe and the United States, and we analyze possible reforms to electricity capacity markets. To account for extreme weather events, capacity requirements and markets, along with other regulatory measures throughout the electricity and fuel supply chains, should be modified. First, capacity requirements must be tailored to the specific severe weather failure modes applicable to a given power system to achieve policymakers' reliability and resiliency objectives: reducing the frequency, magnitude and duration of blackouts. Second, all capacity requirements should be cost-effective and integrated with other non-capacity resources and requirements, such as transmission, distribution and other infrastructure systems. Third, for a capacity market to produce the desired efficiency benefits, the product (capacity) must be well-defined and backed by sufficient credit and other policies to ensure providers have sufficient incentives to perform when called.
Congress often relies on agencies to fill in the details of its transfer programs with regulations, such as those setting eligibility criteria for healthcare, housing, and nutritional assistance. This Article uses three recent rulemakings to illustrate how conventional cost-benefit analysis tends to obscure rather than illuminate agencies’ (often distributional) reasons for issuing such transfer regulations—generating unnecessary legal risk for the agencies and unnecessary confusion for the public. The Article then explains why recently proposed revisions to White House guidance on cost-benefit analysis—including the introduction of an analytic technique called income-based distributional weighting—will not fully resolve this problem. Finally, the Article recommends a new analytic framework for transfer regulations that recognizes the particular relevance of distributional concerns to their promulgation and the distinct challenges of assessing their net benefits.
Reforming Gas Pipeline Review
Natural gas plays an outsized role in the U.S. economy. Under the Natural Gas Act, the Federal Energy Regulatory Commission (FERC or the Commission) is responsible for overseeing the orderly development of interstate natural gas pipelines, which facilitate the transmission of natural gas throughout the country. FERC can approve the pipeline only if it finds that it is required by the “public convenience and necessity.” Although FERC should consider a range of factors to determine whether a pipeline will serve the public interest, in practice, it looks primarily to the contracts between a developer and its customers for the purchase of pipeline capacity. If a developer can demonstrate that there is a party willing to pay to use its pipeline, FERC rarely asks questions and almost always finds “public” need. This pipeline-by-pipeline approach to natural gas transmission build-out leads to the construction of unnecessary, underused pipelines, which in turn increases ratepayer costs and decreases consumer welfare. Climate change further increases the risk that pipelines will become obsolete as cities and states move toward electrification. Relying on economic theory, legal history, and policy analysis, we make the case for FERC’s adoption of regional gas transmission planning.
Letter in SCIENCE Supporting Proposed Adjustment to Discount Rates in Circular A-4
A critical input in cost-benefit analysis is the discount rate, which determines how much impacts in the future are weighted relative to impacts in the present. Federal guidance currently calls on U.S. agencies to apply discount rates of 3% and 7%. But these rates, particularly the 7% rate, substantially devalue impacts that accrue to future generations, thus putting a thumb on the scale against policies that provide long-term benefits such as environmental and public-health regulation. In April, the Office of Management and Budget (OMB) proposed a comprehensive update to that guidance document, known as Circular A-4. Among other revisions, the draft would update the default discount rate used in federal regulatory analysis to 1.7%. In a letter published in Science, leading global experts on discount rates and cost-benefit analysis support the proposed revision.