Energy and Utilities Energy Regulations and Policy 3

Question 1

What does 'stranded costs' mean in the context of electric utility deregulation?

Accepted Answer

Unrecovered utility investments made under regulation that become uneconomic in a competitive market

Answer

Stranded costs are prior utility investments — often in expensive power plants — that cannot be recovered in competitive markets where prices are set by lower-cost generators.

Question 2

What is a 'distributed generation' resource?

Accepted Answer

Small-scale power generation located at or near the point of consumption

Answer

Distributed generation includes small power sources like rooftop solar, small wind turbines, and fuel cells sited close to where electricity is consumed.

Question 3

What is 'carbon pricing' in energy policy?

Accepted Answer

A policy that assigns a monetary cost to CO2 emissions to incentivize reductions

Answer

Carbon pricing, through carbon taxes or cap-and-trade systems, makes emitting CO2 costly so that emitters have an economic incentive to reduce emissions.

Question 4

What is RGGI (the Regional Greenhouse Gas Initiative)?

Accepted Answer

A cap-and-trade program among Northeastern US states to reduce power sector CO2

Answer

RGGI is a cooperative cap-and-trade program among Northeastern and Mid-Atlantic states that limits CO2 emissions from the power sector.

Question 5

What does 'unbundling' mean in the context of utility restructuring?

Accepted Answer

Separating utility services (generation, transmission, distribution) into distinct entities or charges

Answer

Unbundling separates vertically integrated utility functions so that generation, transmission, and distribution are operated and priced independently.

Energy and Utilities Practice Test

Energy and Utilities Practice Test

Energy and Utilities Energy Regulations and Policy 3