Much of the regulation of the U.S. electricity sector takes place at the state level, from the technology used to generate power to how much customers pay for it. In response to concerns about climate change and other issues, states are implementing a variety of policies that have contributed directly or indirectly to a steady decline in greenhouse gas emissions from the U.S. power sector since its peak in 2007.
The most well known state electricity policies target the sources of electricity for consumption in the state. Briefly, these are:
- Carbon limits – These tend to be technology-neutral, and serve to limit the greenhouse gas emissions that can be generated on a per unit basis (a performance standard) or an absolute basis (a cap). Fourteen states currently set carbon limits on electricity generators.
- Portfolio standards – These set a minimum requirement for the amount of electricity that must be provided from preferred technologies. The most common are Renewable Portfolio Standards that favor wind and solar (but sometimes biomass, hydroelectricity, or other renewable fuels). A few states have Alternative Energy Portfolio Standards to promote natural gas or advanced nuclear technologies. Clean Energy Standards have recently been passed that include existing nuclear plants with renewable technologies.
Closely associated with portfolio standards are the accounting framework needed to make sure that each unit of clean electricity is “counted” by only one utility. Renewable Energy Credits (RECs) are the accounting unit for eligible clean energy, and multiple registries exist for tracking the creation and retirement of RECs.
States can also mandate that utilities reduce energy consumption in the state. For example, Maryland passed legislation (the EmPOWER Energy Efficiency Act) that set per capita energy reduction targets that utilities help meet.