The monopoly utility model was once expansive and revolutionary. Now, it is contracting and preservationist.
Philip O’Connor, Ph.D. is president of PROactive Strategies, a Chicago energy and insurance regulatory consulting firm. He is a former chairman of the Illinois Commerce Commission, and Illinois Director of Insurance.
Wayne Olson is the author of “The A to Z of Public Utility Regulation,” published by Public Utilities Reports, 2015, and is a principal at Solutions Economics. Mr. Olson was a senior consultant at National Economic Research Associates, NERA, and earlier worked at the Illinois and Maine public utilities commissions.
Robert Bussa, Ph.D., recently retired from J.P. Morgan Securities LLC after a lengthy career in utility finance. He was, previously, director of the Economics and Rates Department of the Illinois Commerce Commission.
Thirty years ago in Public Utilities Fortnightly, we proposed a Ten-Point Plan for a competitive electricity industry.1 Much of the plan has been realized:
• More than two-fifths of all electricity production comes from non-utility generators, NUGs, compared to less than one-tenth prior to the 1990s.2
• The Federal Energy Regulatory Commission has guided the wholesale market to almost total reliance on market pricing and widespread regional dispatch.
• Non-discriminatory transmission access is customary and, in much of the country, is managed by regional transmission organizations, RTOs.
• One-third of national electricity consumption is accounted for by the fourteen jurisdictions that have unbundled delivery and generation and allow near-universal retail customer choice at the retail level.3,4