Synapse Energy Economics, Inc.

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1) Synapse Writes Primer on Electricity Industry
2) Costs of CO2 Cap-and-Trade
3) Energy Efficiency in PJM
4) Synapse in China
5) Synapse Staff Event
6) Ezra Hausman Named Vice President
7) Recent Publications

Synapse Writes a Primer on the Electricity Industry
New to the electric industry? Have a colleague who is struggling to understand the difference between a rate base and a base rate? Then read on!

The National Regulatory Research Institute (NRRI) commissioned Synapse to prepare a primer on the electric industry aimed at new public utility commissioners and staff. The result was Electricity at a Glance, written by Synapse Senior Consultant William Steinhurst. The report covers the basics of how electricity is produced, distributed, and measured, discusses how and to what extent the states and federal government regulate the industry, provides a tour of how the industry has evolved from a traditional system of monopolies to today's mixed system of competition and monopoly, and the challenges facing state commissions today. An additional chapter written by NRRI Director Scott Hempling discusses the issues of regulatory jurisdiction.
[ Download Report ]

Energy Efficiency in PJM
In March 2009, the Federal Energy Regulatory Committee (FERC) issued an Order (Docket No. ER05-1410, et al) that approved numerous changes to the PJM capacity market. Among the changes approved by the FERC is the integration of energy efficiency resources into the Reliability Pricing Model (RPM) that will allow energy efficiency to qualify and be paid for its summer peak capacity value. Synapse participated in the PJM stakeholder process for the past two years on behalf of the consumer advocate offices of Pennsylvania, Ohio, and the District of Columbia, along with other key allies, such as the Natural Resources Defense Council and the American Council for an Energy-Efficient Economy, to develop the rules approved by the FERC. The first RPM capacity auction with the new rules in effect took place in May 2009; over 500 MW of energy efficiency resources cleared in that auction for delivery in the 2012-13 power year.

PJM, with approximately 135,000 MW of peak load, joins New England, with approximately 28,000 MW of peak load, to become one of the few RTOs that allows energy efficiency resources to compete with traditional resources on a comparable basis to meet regional resource adequacy requirements. Although there are significant differences between the Forward Capacity Market rules in New England and the RPM rules in PJM, the overall intent of the capacity rules in both RTOs is to provide “comparable treatment” to energy efficiency resources in the capacity auction process.

Weird Science!
This year’s Synapse spring event was held at the Boston Museum of Science. The occasion combined fun and learning, as Synapse staff, family, and friends mingled over hors d'oeuvres and a backdrop of the city skyline before venturing out into the museum to enjoy its many exciting exhibits. The crowd favorite was an exhibit showcasing live frog species from around the world, humorously immortalized in the photo above!

Cost to Consumers Versus Actual Cost of Reducing Carbon Emissions Under Various Cap-and-Trade Scenarios

Productive and Unproductive Costs of CO2 Cap-and-Trade: Impacts on Electricity Consumers and Producers
Synapse was commissioned by the National Association of Regulatory Utility Commissioners, the National Association of State Utility Consumer Advocates, the National Rural Electric Cooperative Association, and the American Public Power Association to model the impacts of a range of cap-and-trade allowance allocation scenarios on consumer and generator welfare in regulated and deregulated electricity markets in the United States. The analysis, which represents the early years of a national cap-and-trade program before generation changes or load reductions could be implemented, is unique in its treatment of economic impacts at the generating plant level, and in its focus on consumer impacts at the state and regional levels. The results indicate that cap-and-trade regulation will result in consumer-funded windfall profits for certain generators in deregulated electricity markets and that any free allowance allocation to merchant generators will increase these windfall profits and the cost to consumers. Results are presented at the Regional Transmission Organization (RTO) and state levels to highlight regional differences in these impacts.
[ Download Report ]
[ Download Graph ]

Synapse in China
"China." The name evokes contrasting visions of ancient homes in narrow alleys alongside modern skyscrapers designed by the world's leading architects. To environmentalists and public health experts, it also evokes visions of artificially cloudy skies, created by pollution from the coal-burning power plants and factories driving the nation's lunging economy.

Synapse's Chris James is focusing on helping to clean up this second vision. As part of a long-term project with the Regulatory Assistance Project (RAP) and the Energy Foundation's Beijing office, Chris is working with the Chinese Ministry of Environmental Protection (MEP), along with China's grid operators and planners, to integrate environmental protection into energy planning. A specific focus is to help MEP benefit from forty years of air quality management experience in the U.S. and Europe to improve long-term planning, permitting, and enforcement. A related goal is to focus from the start on multi-pollutant planning, avoiding the single-pollutant focus that has historically hindered the effectiveness and efficiency of many U.S. air agencies.

In some ways, Chinese regulators have already innovated beyond their North American and European colleagues. For example, coal plants that install flue gas desulphurization are paid a differentially higher rate when they operate, to help pay for the costs of controls. Emissions data is also transmitted to the grid operator, which dispatches units based upon their environmental impact. (Under this system, the cleanest unit are dispatched first.)

In November 2008, Chris spoke at emissions trading and air quality management conferences in Beijing and Nanjing about regional air quality planning, using the Regional Greenhouse Gas Initiative (RGGI) as a case study. With return trips to Beijing last May and in November 2009, Chris continues his work promoting an increased focus on emissions trading, generation performance standards, emissions monitoring, and air quality planning.
[ Download May '09 Presentation ]
[ Download November '08 Presentation ]

Ezra Hausman Named Synapse Vice President

Synapse Energy Economics is pleased to announce that Ezra Hausman, Ph.D. has been named Synapse vice president. Ezra joined Synapse in 2005 as a senior associate, and has been instrumental in many of Synapse’s efforts in the areas of electricity market design, environmental regulation of the electric industry, and resource planning.

Ezra works closely with the full range of Synapse clients, from consumer advocates and state and federal agencies to environmental groups and foundations. He supports client needs with a unique combination of expertise, including a background as an atmospheric and climate scientist and 12 years’ experience in the electric industry.

As the author of numerous reports and studies on energy market and environmental topics, as an expert witness in regulatory and other proceedings, and as a technical and policy analyst, Ezra has helped Synapse clients successfully promote consumer and environmental interests on an array of energy topics. As vice president, Ezra will help with Synapse's long-range planning and strategic vision and ensure that the company is equipped to address the coming challenges in the electric energy sector. One specific focus will be to assist our clients navigate the challenges and opportunities presented by likely federal greenhouse gas regulations. (Please see our website for a recent study analyzing the costs to consumers of a variety of regulation options.)

Ezra holds a bachelor of arts degree from Wesleyan University, a master's degree in civil engineering from Tufts University, a master's degree in applied physics from Harvard University, and a doctorate in earth and planetary sciences from Harvard University.

Select Recent Publications

Synapse has recently released a number of informative and interesting reports, testimonies, and presentations. To view a complete listing of all of our publications, please visit www.synapse-energy.com.

Avoided Energy Supply Costs in New England: 2009 Report, Rick Hornby, David White, Bruce Biewald, Chris James, Ben Warfield, and Max Chang, prepared for AESC / Massachusetts Avoided Energy Supply Components Study Group, August 21, 2009. [Download Report]

Energy Future: A Green Energy Alternative for Michigan, Jeremy Fisher, Christopher James, Lucy Johnston, David Schlissel, and Rachel Wilson, prepared for Natural Resources Defense Council and Energy Foundation, August 11, 2009. [Download Report]

"Testimony on Energy Efficiency and Demand Response in Virginia," provided by William Steinhurst, prepared for Southern Environmental Law Center, Appalachian Voices, and Sierra Club, July 31, 2009. [Download Testimony]

Preliminary Assessment of East Kentucky Power Cooperative's 2009 Resource Plan, David Schlissel and Lucy Johnston, June 9, 2009. [Download Report]

Synapse Report and Ohio Comments in Case No. 09-09-EL-COI, 'The Value of Continued Participation in RTOs' , Paul Peterson, Ezra Hausman, Bob Fagan, and Vladlena Sabodash, May 26, 2009. [Download Report]

Incorporating Carbon Dioxide Emissions Reductions in Benefit Calculations for Energy Efficiency: Comments on the Department of Energy's Methodology for Analysis of the Proposed Lighting Standard, Bruce Biewald, David White, Jeremy Fisher, Max Chang, and Lucy Johnston, prepared for New York State Attorney General, May 13, 2009. [Download Report]

Comments Regarding the Department of Energy's Notice of Intent for the Smart Grid Investment Grant Program, Rick Hornby, Bob Fagan, and Bruce Biewald, May 6, 2009. [Download Paper]

No Need to Wait: Using Energy Efficiency and Offsets to Meet Early Electric Sector Greenhouse Gas Targets, Chris James, Jeremy Fisher, Kenji Takahashi, and Ben Warfield, prepared for Environmental Defense, May 1, 2009. [Download Report]

"An Assessment of Santee Cooper's 2008 Resource Planning," presented by David Schlissel, April 22, 2009. [Download Presentation]

WE DON'T WANT TO SPAM YOU!
Synapse Energy Economics is a research and consulting firm specializing in energy, economic, and environmental topics. Our work is typically presented in testimony or reports which are intended to inform sound decisions with regard to ratemaking, regulation, planning, operations, and policy.

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