Energy and Utilities Energy Regulations and Policy 1

Question 1

Which landmark US law restructured wholesale electricity markets and mandated open-access transmission?

Accepted Answer

Energy Policy Act of 1992

Answer

The Energy Policy Act of 1992 promoted competition in wholesale power markets and required open-access transmission, paving the way for deregulation.

Question 2

What does PURPA (Public Utility Regulatory Policies Act of 1978) primarily require utilities to do?

Accepted Answer

Purchase power from qualifying small power producers and cogenerators at avoided cost

Answer

PURPA requires utilities to buy power from qualifying facilities (QFs) at the utility's avoided cost, fostering independent power producers.

Question 3

What is 'rate base' in utility regulation?

Accepted Answer

The value of utility assets on which regulators allow the utility to earn a return

Answer

Rate base is the value of a utility's invested capital — plant, equipment, and working capital — on which regulators permit it to earn an approved rate of return.

Question 4

What is a 'certificate of public convenience and necessity' (CPCN) in the utility industry?

Accepted Answer

A regulatory approval required before constructing major utility infrastructure

Answer

A CPCN is a state or federal regulatory authorization required before a utility may construct major new facilities like pipelines or power lines.

Question 5

What does 'decoupling' mean in utility regulation?

Accepted Answer

Breaking the link between utility revenue and the volume of energy sold

Answer

Decoupling removes the disincentive for utilities to promote energy efficiency by separating their revenue recovery from the amount of energy sold.

Energy and Utilities Practice Test

Energy and Utilities Practice Test

Energy and Utilities Energy Regulations and Policy 1