Research Update

Winter 2011

Greetings! We bring you research news from the Public Utility Research Center (PURC) at the University of Florida. Our electronic newsletter is designed to keep utility regulators, policymakers, and infrastructure managers informed of our research activities. We invite you to join our mailing list and receive our bulletins by email.


Renewable Energy Sources in Island Electric Systems

An island that plans to rely upon renewable energy should first ensure that it has adequate dispatchable generating capacity from other sources. This way, any benefits of adding renewable energy resources are less likely to be outweighed by the costs of system reliability.

Although most of the world's electric markets enjoy some level of interconnection with neighboring markets, island nations generally do not enjoy the advantages of interconnected markets. Instead, they provide energy, the kilowatt-hours used by electric customers, and capacity, the capability to generate energy, by themselves. The provision of reliable electric service is more difficult because of this isolation. Growing emphasis on sources of renewable energy, such as solar photovoltaic and wind energy, may make the problem even more complicated. In examining the problem, the authors simulate the effects of intermittent resources and the capacity and disposition of the fossil-fueled generating fleet to examine the marginal effects of capacity on reliability. Read the paper, "Renewable Energy Sources in Island Electric Systems".


Déjà vu or New Horizons

Utility regulation is undergoing a transition that has only just begun to have its impacts.

Interviewing 14 sitting and former state regulators, consumer counsels, and electric utility representatives, authors Dr. Lynne Holt and Mary Galligan gained insights about the effects of federal and state energy mandates for the operations, processes, and priorities of state public utility commissions. Based on their interviews and research, they discovered the transition in policies has only just begun to have an effect on state commission operations. Yet, these nascent policy changes have also started to impact the discretion exercised by regulators in balancing utility and consumer interests. Read the paper, "Déjà vu or New Horizons".


Handbook for Encouraging Renewable Energy

While not new to the energy mix, renewable energy's importance as part of the overall national and international energy supply is a relatively new phenomenon.

Countries, governments, regulators, and citizens are only just adjusting to this change in the energy world. A recently published Handbook, Encouraging Renewable Energy Development: A Handbook for International Energy Regulators, published by NARUC and the USAID, seeks to help international regulators as they navigate the policy options.


Is There a Need for the Internationalization of Regulation?

Although infrastructure is becoming more international, there is no pressing need for greater internationalization of regulatory institutions for infrastructure.

However, in a time of constant change, there is a need to leverage the co-evolution of service providers, customers, and governance institutions to learn through experimentation. It seems that there are several opportunities for adaptive learning in utilities regulation, not all of which are driven primarily by internationalization of infrastructure. But while the adaptive learning is going on, through focusing on next practices, on the why question, and on leadership, it is important to hang onto the things that are true. In this paper, the author describes the principles and issues that determine the design of regulatory institutions and explains why internationalization of infrastructure does not necessarily call for an internationalization of regulation. Read the paper, "Is There a Need for the Internationalization of Regulation?".


Incentives for Cost Shifting and Misreporting: U.S. Rural Universal Service Subsidies

Do universal service subsidies sometimes provide perverse incentives for telecommunications companies? This study finds evidence of that in the United States.

The study uses data from 1,140 rural telecom firms in 50 states between 1991 and 2002 to test the impact of the U.S. high cost loop support (HCLS) subsidy system on reported costs. The HCLS program has been a key component of the Federal Communications Commission's (FCC) program to promote telephone access in rural, high cost areas. The findings suggest firms in higher reimbursement thresholds tend to report higher costs to the FCC to qualify for higher support payments. The study also finds that the capping of total available subsidy funds increases the incentive to overstate or misclassify costs. Overall, the results suggest that this billion-dollar program deserves closer scrutiny. Read the paper, "Incentives for Cost Shifting and Misreporting: U.S. Rural Universal Service Subsidies".


Report on Strategic Planning for Florida Governmental Broadband Capabilities

Greater centralization and insourcing may make sense in some situations, but PURC research could not find a compelling reason for the state of Florida to move in that direction.

The Report offers a review and analysis of broadband networking used by state and local government in Florida, a view of future trends and opportunities, analyses of comparable states' strategic plans, and financial modeling of alternative policies for Florida. Read the Report, "Incentives for Cost Shifting and Misreporting: U.S. Rural Universal Service Subsidies".


New Price Level and Tariff Design FAQs on BoKIR

Ten new FAQs on Price Level and Tariff Design, prepared by Sophie Trémolet and Diane Binder, are now available on the Body of Knowledge on Infrastructure Regulation. The new FAQs address a wide range of issues facing regulators and managers and can be found on BoKIR's Price Level FAQ and Tariff Design FAQ page.


TPRC Call for Papers

The Telecommunications Policy Research Conference is accepting abstracts of papers, panel proposals, and student papers for presentations at its 2011 conference, to be held September 23-25, at the George Mason University Law School.

The presentations should report current theoretical or empirical research relevant to communication and information policy, and may be from any disciplinary perspective – the sole criterion is research quality. Submissions are due by March 31 and acceptance/rejections will be provided by May 15. For more information about the TPRC, the conference, or the themes for presentations, visit the TPRC's website.


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