LAW 313 - Economic Regulation of Energy Markets

Fall 2 Ted Gerarden

This course will address the principles of economic regulation of energy production, transportation, and delivery. Energy drives the economy, and the substantial investment required to produce, refine, transport, and deliver energy brings with it significant government regulation. We will focus primarily on economic regulation of energy at the Federal level, with some discussion of parallel state regulatory schemes and federal-state jurisdictional issues. The starting point is an understanding of the physical aspects of energy -the different sources of energy and the practical aspects of extraction, refining, transportation, and delivery to users-and the application of economics and antitrust law to understand the rationale for extensive federal and state regulation of energy industries. The course will consider early steps to regulate private industry for the public good, introducing students to principles of economic regulation, including dealing with natural monopolies, requiring certificates or permits for energy facilities, balancing the need for industry to attract capital with rate-payer protection through cost-of-service ratemaking, assuring “just and reasonable” rates and terms and conditions of service, preventing undue discrimination, relying on competitive market forces as a substitute for regulation (light-handed or market-based regulation), and partial deregulation. Key Federal agencies to be examined are the Federal Energy Regulatory Commission (FERC) and the Department of Energy. We also will touch on parallel issues at the state level, efforts to diversify energy sources and reduce environmental impacts, state-federal conflicts, and enforcement programs. Grades will be determined by a mid-term legal memorandum and a final paper.