A proposal for utility regulatory and industry reform.
John D. McMahon is a New York attorney in private practice and former executive with an investor-owned utility company, most recently as executive vice president. Email him at johndanielmcmahon@gmail.com
The nation’s ongoing search for energy solutions gives rise to the question: how is the electric utility industry doing and could it be doing better? The “deregulation” the industry went through in the late 1990s has turned out to be more about “restructured regulation” than it was about “deregulation.”
Today the industry faces significant challenges, many related to carbon. These include nuclear generation; wind power and renewable energy in general; natural gas; electric transmission; demand-side management; and technological innovation and the smart grid.
A common denominator of these challenges is they all require a lot of money to address. The electric utility business remains a capital-intensive one. And the business proposition for many initiatives is uncertain.
Regulators and legislators have resorted to various approaches, ranging from the development of state authorities to finance carbon mitigation, to the creation of state-operated regional cap-and-trade entities such as the Regional Greenhouse Gas Initiative (RGGI), to the creation of state-run renewable energy credit (REC) markets. These approaches overlap each other and would likely have been overlapped yet again rather than have been supplanted if a national cap-and-trade law were enacted.