October - December 1999 Issue


News Items, October - December 1999

On October 28-29, the Center for Energy and Environmental Policy Research (CEEPR) held its fall workshop. Topics included pricing and strategic behavior in electricity markets, spot and future price dynamics of the oil complex, the debate over oil supply, global warming detection and attribution, an update on Title IV as the United States moves into Phase II, and the comparative merits of transmission companies and independent system operators for providing transmission services. Seventy-five representatives from industry, government, and academia attended. Guest speakers were Lawrence S. Bacow, chancellor of MIT and Lee and Geraldine Martin Professor of Environmental Studies, who described environmental activities at MIT, and Institute Professor John M. Deutch, who discussed international security and energy issues.

On November 17-19, the Joint Program on the Science and Policy of Global Change held its fifteenth Global Change Forum, "Definitions, Measurement, and Monitoring in Climate Policy," in Boston, Massachusetts. Topics included the detection of climate change and calibration of climate models; the measurement, monitoring, and enforcement of carbon sinks; interpretation of "dangerous" as used in the Climate Convention; the use of global warming potentials in climate agreements; the interaction of air pollution control and global change; and measurement and implementation in national permit trading systems. Keynote addresses were given by Dr. Jonathan Pershing, head of the Energy and Environment Division of the International Energy Agency, and Dr. Rajendra K. Pachauri, director of the Tata Energy Research Institute in New Delhi. Meeting participants included about 135 representatives from industry, government, and academia, worldwide. The sixteenth forum will be held in Berlin on June 21-23.

Felix AuYeung, a graduate student involved in the Energy Laboratory assessment of new fuels and vehicles for 2020 (see first article of this e-lab issue), is also a member of the MIT Solar Electric Vehicle Team (SEVT) that designed and built the "Manta GTX" solar car that took first place in its class at the World Solar Challenge '99. The 3010 km race from Darwin to Adelaide across the continent of Australia occurred on October 17-26. The Manta GTX finished first in the "cut-out" class and was top finisher from the United States and top finisher using lead-acid batteries. The cut-out class was designed for solar car teams that also competed in the US race Sunrayce and includes specific limitations on the solar-array size and types of allowable batteries. The Manta GTX carries relatively inexpensive Trojan lead-acid batteries and 14%-efficiency Siemens solar cells and is valued at $100,000--well below the top-finishing vehicle from the Australian Aurora team, which is valued at $2,000,000 (US dollars). The World Solar Challenge is a biennial event that attracts competitors and media from around the world and promotes teamwork, communication, and education through friendly competition. The MIT team included 13 students working with trip advisor Gill A. Pratt, assistant professor of electrical engineering and computer science, under the auspices of the MIT Edgerton Center.

Energy Laboratory researcher Marija Ilic is a key contributor to a recently released book, Unlocking the Benefits of Restructuring: A Blueprint for Transmission. The book, published in November by Public Utilities Reports, Inc., presents the latest thinking on how to ensure that transmission systems operate more efficiently and receive the same benefits from competition gained by other components of the electric power sector. The book is a product of active collaboration among some of the foremost experts on economic regulation, business and finance, and power systems engineering. On the power systems engineering side, the book's contributors include Dr. Ilic of the Energy Laboratory; Lester Fink, a retired KEMA, Inc., power expert; and Charles Falcone, formerly senior vice president at American Electric Power. Addressing economics and regulatory issues are many noted economists such as Paul Kleindorfer of University of Pennsylvania, Michael Crew of Rutgers University, Shmuel Oren of University of California at Berkeley, and Ingo Vogelsang of Boston University. Representing finance and industry are Leonard Hyman of Salomon Smith Barney and Andrew Vesey of Ernst & Young LLP, who along with Shimon Awerbuch, an independent economist, edited the publication.

The provision and pricing of transmission services raise several challenges for the electric industry. Regulations now require open access to transmission services for all potential system users, both utility-owned and non-utility owned, including not only generators but also power brokers and those who serve specific loads. However, existing transmission lines were originally designed to deliver electricity from the power plants of a monopoly company to its own customers. Moreover, under open access regulation, the administrative and ownership boundaries that evolved under monopoly regulation are no longer recognized. The challenge to future transmission providers is to serve everyone in a nondiscriminatory manner while becoming sustainable businesses themselves.

A Blueprint for Transmission takes a systematic look at critical aspects of this challenge. The book is organized according to the types of problems studied; yet it recognizes that the technical, regulatory, and economic problems are interrelated. Establishing those interrelationships is a unique feature of this book. Specific topics addressed include the basic function, regulatory policy, and structure of the transmission "business" in a competitive market (Chapter 2); possible approaches to establishing Independent Transmission Companies (ITCs), including such aspects as finance, business organization, and regulation (Chapter 3); ITC strategies and organization (Chapter 4); and novel technical frameworks for transmission operation under open access (Chapter 5). The envisioned ITC would allow for alternative price and profit regulation (Chapter 6), including balanced incentives via innovative ratemaking (Chapters 7 and 8).

The book's successful integration of these disparate disciplines demonstrates the need for--and value of--such multidisciplinary collaboration. Studies of the electric power industry can no longer be undertaken by engineers, economists, and regulatory experts separately. Solutions and progress will result only from close collaboration among experts in all three fields. Activities at the Energy Laboratory support such collaboration and involve several contributors to the new book. Marija Ilic, Paul Kleindorfer, and Ingo Vogelsang are on the research team of a new MIT/ABB initiative entitled "Distribution Industry of the Future." Leonard Hyman has also been a frequent visitor and participant in Energy Laboratory workshops concerning new concepts and software for the electric power industry. Dr. Ilic and Stephen Connors, the co-principal investigators for the MIT/ABB initiative, plan to expand this innovative multidisciplinary collaboration.