Electricity Charges, Mandates and Subsidies

Abstract

The Deep Decarbonization Pathways Project reports identify clear emissions targets and various energy resource scenarios that can meet them. However, they do not tell us which policy levers to pull to get there. This chapter focuses on specific policy changes to electric power mandates, subsidies, and retail customer charges that can help to facilitate the transition to deep decarbonization. Existing state and federal policies regarding these tools demonstrate their potential for balancing economic, consumer welfare, and environmental goals as the electric power system adapts to various decarbonization energy resource scenarios. It will be necessary to significantly scale up and recalibrate electric power mandates, subsidies, and retail customer charges to successfully reduce carbon intensity in the electric power sector. While no one change to these tools will be sufficient on its own to achieve the deep decarbonization's goals, state regulators, Congress, and federal agencies are well positioned to design a package of reforms to ensure that the transition to deep decarbonization does not impair economic efficiency or consumer welfare. Utility regulation provides some particularly powerful tools to build on in doing so.