The Value of Economic Dispatch: A Report to Congress Pursuant to Section 1234 of the Energy Policy Act of 2005

Section 12341 of the Energy Policy Act of 2005 (EPAct) directs the U.S. Department of Energy (the Department) to: 1) study the procedures currently used by electric utilities to perform economic dispatch; 2) identify possible revisions to those procedures to improve the ability of non-utility generation resources to offer their output for inclusion in economic dispatch; and 3) analyze the potential benefits to state and national residential, commercial, and industrial electricity consumers of revising economic dispatch procedures to improve the ability of non-utility generation resources to offer their output for inclusion in economic dispatch. EPAct defines .“economic dispatch.” to mean .“the operation of generation facilities to produce energy at the lowest cost to reliably serve consumers, recognizing any operational limits of generation and transmission facilities.” [EPAct 2005, Sec.1234 (b)]. EPAct requires the Secretary of Energy to submit a report on economic dispatch to Congress and the states no later than 90 days following enactment of the act and annually thereafter. The study is to include any recommendations that the Secretary chooses to make to Congress and the states concerning legislative or regulatory changes related to economic dispatch [EPAct 2005 at Sec. 1234 (c)]. This report fulfills that statutory requirement. As explained below, the remaining sections of this document present information gathered for this report through a survey of stakeholders and a literature review, including how economic dispatch is practiced in the U.S., its benefits, practices and rules that are identified as obstacles to optimal participation of non-utility generators (NUGs) in economic dispatch, and suggestions for modifications and future research on economic dispatch.