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and disseminate information on damages and impacts, provide information on restoration efforts and progress, facilitate restoration of energy services through emergency responder services, and provide technical support to utilities and other companies to restore services.

In 2018, the Office of Electricity Delivery and Energy Reliability was split into two offices: the Office of Electricity and CESER. The DOE co-ordinates emergency response for the energy sector through the Infrastructure Security and Energy Restoration (ISER) division of CESER, which was established in 2018. Types of emergency events include hurricanes, wildfires, earthquakes and typhoons. The rationale for the creation of CESER was to improve energy infrastructure security, address national security threats, and enable stronger and more effective preparedness and responses to natural and humancaused threats. For fiscal year 2019, the federal budget allocated USD 156 million to the Office of Electricity and USD 120 million to CESER, of which USD 90 million is dedicated to cybersecurity.

ISER prepares staffing plans and emergency response ahead of an expected natural disaster by deploying responders to state emergency operations centres in at-risk regions as well as the Federal Emergency Management Agency (FEMA) Regional Response Coordination Center in the affected areas. ISER continues to monitor the situation from its headquarters and remains in close co-ordination and communication with various official and industry representatives at the state and local levels. Following an incident, ISER experts are on hand in the impacted area to provide subject matter expertise and advice to help restore system capabilities. In this capacity, ISER holds daily calls with companies in the electricity (and oil and gas) sector, as well as offers twice-daily situation reports and analysis to the energy sector. In cases where the recovery efforts take longer, ISER works with local utilities, FEMA and the US Army Corps of Engineers to identify temporary power supply options, especially for first responders. Pursuant to an emergency response, ISER also conducts a review of its procedures in order to improve upon its capabilities and expertise.

Assessment

Bulk power markets

The United States has experienced and managed significant changes to its electricity generation mix since the last IEA review in 2014. Since then, according to the EIA October 2018 “Monthly Electric Generator Inventory”, approximately 75 GW of electricity generation capacity retired, predominantly coal-fired, followed by gasand oil-fired generation. In the same period, approximately 92 GW of new generation was added, largely natural gas and renewables. This occurred all under a period of relatively flat electricity demand and resulted in a decrease in carbon intensity. The EIA Annual Energy Outlook 2019 projects this trend to continue with more gas-fired and renewables units coming online in the coming decade.

The United States has a complex electricity system with a mix of competitive markets, bilateral markets, and private and publicly owned assets. A majority of the country’s power system operates under federally regulated regional competitive bulk markets. Competition in these markets has fostered the introduction of innovative new technologies and business models. Regulatory authority over bulk power markets rests

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with the FERC. Within this market structure, electricity market innovation includes participation of demand response aggregators in capacity markets and the creation and expansion of energy imbalance markets. NERC plays an important role in developing standards to ensure reliable system operation.

To develop new market rules, FERC uses a spectrum of robust and transparent proceedings to capture the views of market participants. To establish market rules and regulations, FERC uses a prescribed process that respects commercially sensitive information. FERC also has the ability to provide guidance and regulatory certainty by issuing policy statements that allow for a holistic discussion on relevant market issues.

Individual states influence their respective energy generation mix through different policy mechanisms, such as rate base approval for adding new generation or distribution systems, RPS, or ZEC programmes. State RPS policies are not static and evolve over time. Within a given FERC-regulated ISO or RTO area, there can be states with different RPS levels. As individual states change their respective RPS targets or ZEC programmes, there is potential for misalignment between state energy goals and ISO/RTO market price formation rules.

FERC continues to respond to the needs of evolving competitive electricity markets to ensure efficient and reliable markets. Evidence of this includes, but is not limited to, Order 841 to facilitate the participation of electric storage resources in RTO/ISO markets; Order 842 to address the potential reliability impact of an evolving generation resource mix; and Order 848 to augment the mandatory reporting of cybersecurity incidents. On occasion, FERC and an RTO/ISO can disagree on measures to boost reliability in the face of changes to power systems. A recent example is a 2018 decision by FERC to reject two proposed options by PJM on capacity market reform, which will require PJM to offer alternative options. This is a good illustration of the potential challenge confronting regional system operators as they try to ensure the operation of competitive bulk electricity markets amid ambitious state-driven clean energy policy goals.

The ongoing and forthcoming changes to US power markets – especially the growth of renewables generation and the need to pay for cyberand physical security mitigation measures – will also require upgrading and expanding the nation’s ageing transmission networks. To this end, FERC issued Order No 1000 in 2011 to support cost-effective regional transmission planning. Some observers have suggested that FERC should consider whether modifications to Order No 1000 are merited, but the commission has not indicated its intentions.

Recent court rulings and federal regulatory decisions provide more jurisdictional clarity on issues relating to electricity markets. Recent rulings in the federal courts affirm state jurisdiction to support clean energy generation sources. The decision by the US Court of Appeals for the 7th Circuit supported the Illinois ZEC programme. The US Court of Appeals for the 2nd Circuit supported New York’s ZEC programme. The court rulings provide more clarity to state and regional market participants to inform their respective investment decisions.

In September 2017, the Secretary of Energy proposed that FERC set a rule for “fuel secure” generation, including coal and nuclear (NOPR for the Grid Resiliency Pricing Rule). FERC rejected DOE’s request but opened a docket to explore bulk power resilience and to understand how each RTO and ISO assesses resilience in its geographic area to evaluate the need for modification. The DOE is exploring options to

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