The Role of Energy Models : Characterizing the Uncertainty of the Future Electricity System to Design More Efficient and Effective Laws and Regulations

When designing environmental protection and energy regulation policies, legislators and regulators rely upon the results of computer models that purport to forecast future conditions such as energy supply, demand, available technologies and market characteristics. In a perfect world, these energy models would prove to be reliable and would, in turn, yield projections that would enable legislators and regulators to confidently enact regulations that advance societal energy and environmental goals. Unfortunately, it is impossible to predict or forecast with confidence all the variables that influence regulation and the effects of any regulatory choice. In this Article, we suggest that principles of dynamic law can be used as guidance to design policy that is coherent with the highly uncertain context in which it operates. We explore the idea that the uncertainty surrounding the outcomes of a regulation can be taken into account and made part of the regulatory design. In so doing, we suggest that regulations can tackle uncertainty using the same methods by which the energy modeling community attempts to understand and bound uncertainty. The diverse set of projected regulatory effects produced by different models under different assumptions reveals risks and opportunities: The risk of ineffective regulation and unintended consequences; and the opportunity of making “dynamic regulations” that change with the pace of new information