Chapter Notes

1. U.S. Department of Energy, Supporting Analysis for the Comprehensive Electricity Competition Act, DOE/PO-0059 (Washington, DC, May 1999).

2. Memorandum to Jay Hakes from Secretary Richardson. See Appendix E for full text.

3. Memorandum to Mary Hutzler from Howard Gruenspecht. See Appendix E for full text.

4. The Supporting Analysis provided the major changes to the AEO99 assumptions to incorporate competition. However, during the preparation of comparison runs in this analysis, other assumptions were noted that affected the results and these were documented in the memorandum of August 18, 1999, in Appendix E.

5. Energy Information Administration, Annual Energy Outlook 1999, DOE/EIA-0383(99) (Washington, DC, December 1998). More detailed information on the National Energy Modeling System and the assumptions used in the AEO can be found online at http://www.eia.doe.gov/oiaf/aeo.html.

6. For discussion of the major modeling differences between NEMS and POEMS see Chapter 3.

7. Specific values for the assumptions discussed in this section are given in Appendix C.

8. The stranded costs incorporated in this analysis were provided by DOE's Office of Policy, which prepared the analysis of CECA. Aggregate estimates of net stranded costs calculated in NEMS are similar to those calculated in POEMS. As specified in the Supporting Analysis, the recovery of additional stranded costs, including regulatory assets and nuclear decommissioning costs, extends beyond 10 years.

9. Sixty-one percent of the generation from municipal solid waste facilities is estimated to come from biomass sources.

10. The Administration's Climate Change Technology Initiative, proposed as part of the fiscal year 2000 budget, implements these credits only for plants built between July 1999 and 2004. In this analysis, as they were in the Supporting Analysis, these programs are assumed to be extended through 2015. The same extension is also applied to the biomass co-firing credit.

11. Energy Information Administration, Analysis of the Climate Change Technology Initiative, SR/OIAF/99-01 (Washington, DC, April 1999).

12. The CECA limits the value of a credit to 1.5 cents per kilowatthour. However, the Supporting Analysis prepared by DOE estimated that a certain amount of new renewable generation would be stimulated by green power programs, which allow consumers to purchase electricity from renewable sources for a slightly higher price. To simulate the presumed success of these programs, the Supporting Analysis added 0.3 cents per kilowatthour to the 1.5-cent cap used in POEMS, and the RPS was raised to 7.8 percent.

13. The constraint that limited new wind development to 1 gigawatt per year per region in the AEO99 was also removed, because the renewable incentives presumably would bring more developers into the market.

14. See Appendix C, Table C6, for specific targets.

15. In the AEO99 it was assumed that older plants would maintain their current performance; that is, they would not improve their efficiencies or other operating costs.

16. The AEO99 assumed a 25-percent reduction (2.8-percent reduction annually) in G&A costs over 10 years. The AEO99 assumed no improvement in transmission and distribution costs.

17. These factors are designed to calibrate the first 2 years of NEMS results to the results of the Short-Term Integrated Forecasting System used to produce EIA's Short-Term Energy Outlook.

18. See Appendix A in Energy Information Administration, Electricity Prices in a Competitive Environment: Marginal Cost Pricing of Generation Services and Financial Status of Electric Utilities, DOE/EIA-0614 (Washington, DC, August 1997), p. 89.

19. F.C. Schweppe, M.C. Caramanis, R.D. Tabors, and R.E. Bohn, Spot Pricing of Electricity (New York, NY: Kluwer Academic Publishers, 1988).