Coalition Stability in PJM: Exploring the Consequences of State Defection from the Wholesale Market

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2022-11-28

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Abstract

Using a simulation tool, the authors investigate the effects created by a US state defecting from the wholesale electricity market in PJM, an organized electric grid in the eastern United States, on the states that remain in the coalition. The report finds, generally, that if a net-importing state defects from the wholesale energy market, the remaining states’ producers are worse off and the remaining states’ consumers are better off. The opposite effect takes hold if the defecting state is a net-exporter. Furthermore, the authors find evidence that defection impacts the remaining states’ climate initiatives. The effectiveness of electric vehicle and solar photovoltaic policies are conditional on the number and characteristics of defecting states. The simulations suggest that, for state legislatures pursuing these climate goals, the best strategy to adopt is to pass laws that are both geographically targeted and flexible.

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Dauwalter, Travis, Ali Daraeepour, Brian Murray and Dalia Patino-Echeverri (2022). Coalition Stability in PJM: Exploring the Consequences of State Defection from the Wholesale Market. Retrieved from https://hdl.handle.net/10161/26570.

Scholars@Duke

Murray

Brian Murray

Research Professor in the Division of Environmental Sciences and Policy

Dr. Brian C. Murray is Director of the Nicholas Institute for Energy, Environment & Sustainability, Research Professor at the Nicholas School of the Environment (primary) and Sanford School of Public Policy (secondary), and Faculty Associate of the Duke Initiative for Science & Society. In 2015 he was Fulbright Visiting Research Chair in Environment and Economy at University of Ottawa’s Institute of the Environment.  He is widely recognized for his work on the economics of energy and climate change policy, including the design of market based mechanisms to reduce greenhouse gases and deploy low-carbon energy. Members of the United States Congress, state legislators and regulators have sought the counsel of Dr. Murray and colleagues in developing energy and climate legislative proposals and regulatory options.  Their development of the cost containment reserve mechanism is now in use in several greenhouse cap-and-trade programs in North America.  Dr. Murray has been invited as a co-author of several national and international assessments of natural resources, especially related to energy and climate change. Of particular note, he serves on a National Academy of Sciences panel on greenhouse gases and the tax code, where he led the panel’s efforts on biofuel subsidies.  He was a convening lead author of the Intergovernmental Panel on Climate Change’s Special Report on Land Use, Land Use Change, and Forestry. He has convened several forums of economic modeling experts to examine and communicate the results of their climate, energy and land use policy efforts to the public and private sectors.  His research has examined the economic effects of traditional command-based regulatory strategies for pollution control and more market-oriented approaches such as cap-and-trade programs and emission taxes.  He has been a consultant to a wide range of clientele in the public and private sector, including numerous federal government agencies, members of Congress and their staff, state regulatory agencies, CEOs and senior staff from Fortune 500 companies, trade groups, nongovernmental organizations, and other academic institutions.   He has authored or co-authored over 100 publications in books, edited volumes, and professional journals across a range od disciplines.  From 2017-21 he was a regular contributor to Forbes. Prior to coming to the Nicholas Institute in 2006, Dr. Murray was Director of the Center for Regulatory Economics and Policy Research at RTI International, a university-affiliated not-for-profit research institution. 

Patino-Echeverri

Dalia Patino-Echeverri

Gendell Family Associate Professor

Dr. Patino-Echeverri’s research focuses on public policy design for energy systems, with a particular emphasis on managing the risks arising from the uncertainties influencing the outcomes of government actions. Much of her current work focuses on the policies that affect capital investment decisions within the electricity industry, and the corresponding costs to society of electricity and air-emissions levels. Her models explore the effects of different government policies by representing the industry’s decisions under uncertainty on future technological advancements, fuel prices, and emissions regulations.


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