The following guest post was written by Mary Pietrzyk, NEI’s Manager, Fuel Cycle Policies and Programs.
I had the opportunity recently to participate in a thought provoking and action packed event in Washington, DC—NARUC’s Energy Risk Lab. NARUC, the National Association of Regulatory Utility Commissioners, is the national association representing public utility commissioners from each state. NARUC is a valuable resource for Commissioners around the country and provides fora for dialogue among diverse entities in the public utility industry.
NARUC’s Energy Risk Lab, generously supported by the U.S. Department of Energy, is a scenario-planning game that looks at decisions and uncertainty facing the U.S. electricity generation sector. NARUC staff, using natural disaster related emergency tabletop exercises as a foundation, developed this game, along with others, to explore the impacts of new policy, market, or technology developments on electricity generation.
The basis of this lab is that each team is given a portfolio of generation. Teams start with coal, and then other technologies are added as the game progresses. NARUC’s Miles Keogh walked our group through various rounds of complying with U.S. Environmental Protection Agency Rules. After getting a brief overview of each rule, teams had to retrofit, repower or replace generation to comply with:
· the Mercury and Air Toxics Rule in round 1;
· the Cross-State Air Pollution Rule in round 3; and
· the New Source Performance Standards Rule for existing plants in round 5.
While some of these rules are not finalized, assumptions were made as to what would be deemed compliant. Teams worked to make generation decisions, manage uncertainties as the game progressed, and eventually worked between teams to buy and sell generation and allowances.
In addition to gaining valuable knowledge about EPA rules, the game explored the psychology of decision-making under situations of uncertainty and incomplete information (sounds like the real world doesn’t it?) For example, all teams had a proclivity to make small incremental changes instead of making dramatic changes to their generation portfolios due to uncertainty looming in subsequent rounds.
It was also difficult to balance the various drivers of change—complying with the rules in a timely manner while maintaining reliability, developing new clean energy generation while managing costs, and the list continues. Compounding the challenges, my team was representative of a diverse set of interests (industry, environmental organizations, regulatory organizations, etc), so options had to be carefully presented and defended.
This game definitely conveyed the enormous pressures on our electricity system—but more importantly the enormous pressure on our utilities, regulators and legislators who have to make these generation planning decisions.
Kudos to the NARUC team and the Department of Energy for the great event! A special thanks to the Carnegie Endowment for International Peace for hosting the group in its DC conference center.
Anyone seeking more information regarding the Energy Risk Lab should contact Miles Keough, Director of Grants and Research, at mkeough-at-naruc.org.