CEA Energy Policy & Market Analysis 2

Question 1

Under the Public Utility Regulatory Policies Act (PURPA), utilities are required to purchase power from qualifying facilities (QFs) at what rate?

Accepted Answer

The utility's avoided cost

Answer

PURPA requires utilities to purchase QF power at the utility's avoided cost — the cost the utility would have incurred to generate or purchase that power elsewhere.

Question 2

Which market structure characterizes most U.S. electricity markets operated by regional transmission organizations (RTOs)?

Accepted Answer

Nodal locational marginal pricing (LMP)

Answer

RTOs use nodal LMP, which sets prices at each bus in the transmission network based on local supply, demand, and congestion.

Question 3

The Social Cost of Carbon (SCC) is used in federal rulemaking primarily to:

Accepted Answer

Quantify climate damages for cost-benefit analyses of regulations

Answer

The SCC monetizes the long-term economic damages from emitting one additional ton of CO₂, enabling agencies to weigh climate impacts in regulatory cost-benefit analyses.

Question 4

In a capacity market, such as PJM's Reliability Pricing Model (RPM), what does a generator sell?

Accepted Answer

A commitment to be available to generate power during peak periods

Answer

Capacity markets compensate generators for their commitment to be available, ensuring adequate reserves to meet peak demand even if energy sales alone are insufficient.

Question 5

Which federal agency oversees wholesale electricity markets and interstate natural gas pipelines in the United States?

Accepted Answer

Federal Energy Regulatory Commission (FERC)

Answer

FERC regulates wholesale electricity sales, transmission access, and interstate natural gas and oil pipeline rates under the Federal Power Act and Natural Gas Act.

(CEA) Certified Energy Analyst Practice Test

(CEA) Certified Energy Analyst Practice Test

CEA Energy Policy & Market Analysis 2