The Periodic Table of the
Electric Utility Landscape:
A Series of Visual Tools for
Enhanced Policy Analysis
Cameron Brooks is founder and
President of E9 Insight, a Boulder,
Colorado, firm that tracks regulatory
proceedings and provides customized
research for U.S. electric utility
industry companies, agencies, and
organizations. He has served as an
advisor on energy issues to
organizations including U.S.
Department of Energy, Lawrence
Berkeley National Labs, Google,
Energy Foundation, Tendril,
Varentec, Navigant Research,
Mission:data, Gridwise Alliance, and
the Smart Grid Consumer
Collaborative. Prior to founding E9
Insight he was Vice President of
Policy at Tendril, responsible for
regulatory engagement and market
segmentation. He holds an M.B.A.
from Cornell University with a focus
on energy markets and a B.A. from
Yale University.
82
Most contemporary perspectives are either incomplete or
incorrect in their portrayal of the changing regulatory
landscape. A series of novel visualization tools—
organized around a stylized version of the periodic table—
serves as a map that facilitates a holistic framework to
quickly assess market structures, promising points of
entry for policy strategies and a more detailed
understanding of this regulatory landscape.
Cameron Brooks
I. Introduction
The United States Department
of Energy (DOE) surprised few
with the conclusions in its firstever Quadrennial Energy
Review (QER), released in the
spring of 2015.1 Noting that the
U.S. electrical grid is at ‘‘a
strategic inflection point,’’ the
QER recommends spending
$300–$350 million over five
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
years to ‘‘promote and
integrate TS&D [transportation,
storage and distribution]
infrastructure investment plans
for electricity reliability,
affordability, efficiency, lower
carbon generation, and
environmental protection.’’ The
QER also recommends
‘‘comprehensive grid
modernization,’’ at a cost of $3.5
billion over 10 years.2
The Electricity Journal
The pressure to revamp the
grid comes not only from the
federal government but also from
other directions. Advancements
in technologies such as
distributed energy resources,
demand response management,
and energy efficiency are poised
to create significant changes in the
electric utility industry. By
creating new choices for
customers, these advances are
forcing the creation of new
business strategies, unbundling of
costs and services, and new
regulatory approaches. This
‘‘strategic inflection point’’
represents a change in the
operation and regulation of an
electrical transmission and
generation system that has been
evolving since Thomas Edison
began selling power
commercially in the 1880s.3 It is a
once-in-a-generation opportunity
to create meaningful, necessary
change in the system. It is also an
opportunity that easily could be
squandered in the absence of
sound execution strategies.
etermining where to invest
time, energy, and resources
for pioneering changes to the grid
necessitates understanding a true
picture of the multi-dimensional
utility landscape: its history, its
structure, its culture, and its
regulation. This is more
complicated than may be
apparent at first glance. Typical
discussions within the industry
devolve toward simplistic and
potentially misguided
representations of the utility
landscape, with potentially
D
July 2015,
Vol. 28, Issue 6
significant implications for
practitioners. These discussions
often take a binary perspective
along a single parameter:
traditional utilities versus
restructured; elected state
commissioners versus appointed;
the presence or absence of
renewable portfolio standards;
even ‘‘red’’ state versus ‘‘blue’’
state.
A better understanding is
needed. As they consider the
By creating new choices
for customers, these
advances are forcing the
creation of new
business strategies,
unbundling of costs
and services, and new
regulatory approaches.
opportunities and challenges of
the moment, especially those
highlighted by the QER,
interested third parties
(including federal agencies
themselves) require new tools to
properly understand how and
why individual utilities,
regulatory bodies, states and
independent system operators
(ISOs) behave as they do in
various locales and situations.
Such an understanding will help
third parties prioritize promising
opportunities—and avoid
unfavorable ones—to effectively
engage in the development of
new business models for, and
regulatory approaches to, the
industry.
ur rubric at E9 Insight for
viewing the utility
ecosystem—an adaptation of
chemistry’s periodic table
(Figures 1 and 4), detailed in
Section V—is a set of visual
representations that
simultaneously describes the
historical and cultural system
within which utility operators
and regulators make decisions in
each state. Further, the rubric
situates the individual states in
meaningful relationship to each
other to form a complete picture
of the U.S. electric utility
ecosystem today while
preserving the unique nature of
each state. This rubric can guide
and inform deeper
investigations as third parties
assess where, how and why to
implement change.
O
II. A History of the
Utility Industry in Five
Acts
The electric grid and the
companies that operate it did not
emerge fully formed, but rather
evolved, morphed, and fractured
over the past century-and-a-third.
To understand where the utility
industry is going it is necessary to
understand its present state and
how it came into being. Today the
United States is home to six
classes of utilities,4 each with an
ingrained historical structure and
resulting culture. Here, in five
acts, is how they came to be.
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
83
[(Figure_1)TD$IG]
Figure 1: An illustrated timeline of the US electricity market
A. Act 1: Origins
Commercial electrical
generation and distribution began
in the late 1800s with a focus on
providing electrical lighting as a
substitute for existing gas
lighting.5 In short order the
nascent industry split down two
paths that represent the first pair
of today’s six utility classes:
investor-owned utilities and
municipal utilities. While we are
accustomed to believe that the
industry sprang to life
immediately following the
introduction of Edison’s light
bulb, in fact the industry grew
slowly into the early 20th century
around lighting. By 1900, almost
84
20 years after Thomas Edison
began supplying commercial
electricity in Manhattan, only 3
percent of U.S. homes were
electrified, and only 5 percent of
motive power in the nation’s
factories was electrical.6
B. Act 2: Industrial expansion
While lighting was novel and
luxurious, true demand for
electricity rode the coattails of
growth in two major industries,
paper manufacturing and
automobile manufacturing.7 By
the late 1920s, competition
between utilities had grown
fierce, with vertically integrated
electric companies sometimes
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
stringing new power lines
alongside their competitors’. This
competition often drove prices
below marginal costs for utilities,
leading many to bankruptcy.
Facing redundancy and
unprofitability, investor
utilities—most visibly led by
Chicago-area utility pioneer
Samuel Insull—willingly
surrendered to government
regulation in exchange for
monopoly positions in their
markets.8 This ‘‘regulatory
compact’’ became the cornerstone
of utility regulation throughout
the 20th century to the present
day. Regulation provided more
reliable revenue, which led to
cheaper financing for the growing
The Electricity Journal
[(Figure_2)TD$IG]
Figure 2: The six utility classes as proportioned to market revenue
industry and consolidation within
it. Yet regulation also sowed the
seeds of what would become a codependent relationship between
regulators and investor-owned
utilities.9 These developments set
the stage for utilities to realize
significant economies of scale as
demand for electricity grew.
ranklin Delano Roosevelt’s
New Deal of the 1930s was
F
July 2015,
Vol. 28, Issue 6
notable for bringing three critical
changes to the electric utility
landscape. The first was the
Federal Power Act, which
delineated regulatory jurisdiction
between the federal government
(which regulates interstate and
wholesale transfer of electricity)
and the states, whose utility
commissions oversee local and
retail transactions. The second
was the Rural Electrification Act,
which expanded electrical
distribution into rural areas
through the creation of publicly
owned co-ops (the third class of
utility to arrive on the scene). The
third was the New Deal-led
federal push to electrify the entire
country that brought into being
federal authorities such as the
Bonneville Power Administration
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
85
[(Figure_3)TD$IG]
Figure 3: The industry, especially in the regulated classes, is heavily dominated by the top 225 ‘‘large’’ utilities. The largest 13 holding
companies represent: 50% of all integrated utilities; 64% of all restructured utilities; and 52% of the retail segment
[(Figure_4)TD$IG]
Figure 4: Periodic Table of State Policy
86
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
The Electricity Journal
and Tennessee Valley Authority,
included in a broader class of
‘‘other,’’ mostly public, utilities,
as the fourth class in our
taxonomy. In many respects, the
regulatory compact that emerged
during this period also
empowered the federal
government to promote
electrification not merely as a
commodity for the rich, but as an
essential industrial and economic
development policy.
C. Act 3: The Boom Years
The middle of the 20th century
was, arguably, the best expression
in the industry’s history as a
regulated monopoly. Thanks to
economies of scale, costs declined
as demand rose, while identified
negative impacts (such as
redundant power lines) were
minimized. Forces aligned for
utilities to build bigger,
centralized generating plants.
Perhaps most significantly from a
regulatory point of view, the 1944
U.S. Supreme Court ruling in
Federal Power Commission v. Hope
Natural Gas Co. embedded the
notion that ‘‘actual legitimate
cost’’ should be the primary
method by which regulators
should set rates. The effect was to
solidify the focus on invested
capital as the primary variable
affecting utilities utilities’ profit
and return on investment.10 This
ratemaking system prevails to this
day, dramatically confounding
efforts to support innovation and
the adoption of energy- and costsaving technologies.
July 2015,
Vol. 28, Issue 6
D. Act 4: Oil shocks and
PURPA
The rise of the Organization of
Petroleum Exporting Countries
(OPEC) and the resulting two oil
shocks of the 1970s coincided with
the period when utilities began to
approach the natural limits of
economies of scale.11 Also at this
time, utilities began to argue
effectively that they should be
able to protect themselves from
The middle of
the 20th century
was, arguably,
the best expression
in the industry’s
history as
a regulated
monopoly.
Regulatory Commission (FERC)
Order 888 and Order 889 of April
1996, which promoted openmarket access to transmission
facilities and greater information
sharing.13 These developments in
turn presaged FERC Order 2000,
issued in December 1999, which
strongly encouraged the creation
of open-market independent
service operators (ISOs).
even competitive wholesale
markets subsequently arose.
Three are state-specific: California,
New York, and Texas (which was
formed near the same time, but not
directly related to FERC activities).
The remaining four (New England
ISO, PJM, SPP, and MISO) span
multiple states. In general, states in
the South, Northwest, and
Mountain West did not participate
in the creation of ISOs and
continue to resist calls for broader
wholesale market structures.
S
E. Act 5: Restructuring
unpredictable fuel costs.
Acceptance of this argument
spread, so that by the early 1990s
most rate cases externalized fuel
costs to consumers.12
hese developments
converged with a rising
environmental movement and
nascent environmental laws that
set the stage for a focus on energy
efficiency. Likewise, the Public
Utilities Regulatory Power Act
(PURPA) of 1978 began to crack
open markets for cogeneration
and solar generation of
electricity. PURPA was the first
step in a regulatory process that
would lead to the Federal Energy
T
The rise of ISOs coincided with
a wave of legislative restructuring
initiatives in many states. In most
cases, this resulted in a divestiture
of utility-owned generation, the
introduction of open-access
transmission markets and retail
competition for large industrial
users and mass-market
consumers. The process fractured
the investor-owned utility
market, creating our fifth and
sixth class of utilities: restructured
utilities (amalgamations of
distribution ‘‘wires companies’’
and default service) and
competitive retailers, which
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
87
effectively serve as commodity
energy brokers.
Thus six ‘‘species,’’ or distinct
classes, of utilities, falling into two
families, populate today’s utility
landscape (as delineated in
Figure 2):
Despite this apparent diversity,
a few large players dominate the
industry. As Figure 3 shows, 72
percent of U.S. electricity sales are
controlled by investor-owned
utilities, and this number skews
toward the largest players.
Although there are reportedly
nearly 4,000 utility entities in the
U.S.,14 the 10 largest integrated
utilities alone control 38 percent
of the integrated portion of the
market and 14 percent of the
entire market. The public utility
sector is less top-heavy. For
example, the 10 largest
municipals control 28 percent of
the municipal market but only 3
percent of the entire market.
III. The Role of State
Commissions
Today, approximately 80
percent of retail electricity market
revenues are regulated by state
commissions. (The balance is
regulated by other entities such as
city council boards and elected
cooperative boards.) These
commissions, comprised of a
mere 200 individual
commissioners across the
country, dominate and, in large
part, define the industry.
ore than any other body, it
is the state public utility
commission that determines what
M
88
the fundamental investment
incentives will be for the electricity
market in their states. While state
and federal policy identify
reducing carbon emissions as one
of the great challenges of our time,
the individual actions of wellmeaning citizens or utility
programs are limited in their effect
by the infrastructure to which they
connect. To that extent, the
network of commissioners around
the country serve as the architects
of the electric grid every bit as
much as the engineers that
manage its operation.
The commissioners must
balance what often feel like
policies held in tension:
reliability, affordability,
innovation, security, customer
protection and environmental
impacts. Advocates,
policymakers and technologists
wishing to cut new channels
through which investments might
flow (supporting, for example,
distributed energy or consumer
technologies) are wise to
understand the specifics of how
the commissions are authorized,
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
managed and motivated if new
policies—new design
innovations—are to thrive.
he commissions come in a
variety of shapes and sizes.
Ranging from three to seven
members, commissioners are
elected in 13 states, while in the
remaining 38 jurisdictions
(including the District of
Columbia) they are appointed,
typically by the governor.
Commissioners’ authority and
independence varies in several
dimensions. For example, in most
states authority is granted to the
commission by the legislature, but
in some states the commission is
established by the state
constitution, which can result in
greater independence for
commissions, as they are less
subject to legislative control.
There is also variability in
commissions’ authority and
organizational structure.15
Finally, there is significant
variability in the process by which
stakeholders may participate.16
Commission members can
come from any background, but
the fields of regulated industry,
law, consumer advocacy, and
academia are heavily represented.
Their main task is to be economic
regulators of integrated and
restructured utilities and to
include within that role the
responsibility to protecting
consumers from market power
and achieving what would,
presumably, be the result of
competitive markets: low rates
and reliable service. Many
commissions are responsible for
T
The Electricity Journal
several regulated industries and
many commissioners are new to
the job of regulation. Their role is
often quasi-judicial, with a focus
on building a formal record upon
which they and others rely,
sometimes to the exclusion of
other considerations.
Some observers have critiqued
this system of regulation, which
evolved over the last century,
noting in particular the failure of
the regulated industry to achieve
high levels of innovation found in
other segments of the economy.17
They point to examples of
apparent regulatory capture by
the industry; utility activities to
block competitors from entering
the market by extending their
monopoly; utility influence of the
regulatory process; the risk of
revolving doors between industry
and regulators; and instances
where the regulatory commission
is outmatched by the financial,
legal and professional capabilities
of the industry.18
hose critiques are even more
relevant in the face of
changing technologies, changing
customer preferences, and
changing environmental policies.
Addressing them is important in
the context of the opportunities
identified by the QER to reform
and restructure the electric utility
system. These opportunities may
be lost if structural issues are not
considered effectively.
T
schematics we have followed this
norm, using retail sales as our
metric (Figure 5.1). How that
revenue is generated is a function
of the incentives created by the
regulated market within which
utilities operate, which is largely
shaped by the utility
commissions. The Hope case
represents a legacy that remains
the most potent component in
understanding the fundamental
cost-based incentives of regulated
(integrated and restructured)
utilities.19 These utilities continue
to operate within a business
model that effectively guarantees
a negotiated rate of return on
investment. In its most simplified
terms, rates are determined
through these formulas:
Revenue ¼ Assets½‘‘rate base’’
Rate of Return
þ Operating Expenses
Customer Rates ¼ Revenue
IV. Resulting Incentives
Utilities often are measured in
terms of sales revenue, and in our
July 2015,
Vol. 28, Issue 6
þ Fuel Costs
A glance reveals that regulated
utilities are insulated from
competitive forces regarding
operational efficiency and are
highly incentivized to invest in
capital equipment. One
predictable result is very low fleet
utilization rates, observed among
the nation’s electric generation
capacity to be below 50 percent
since 2002, with many
transmission and distribution
systems even lower.20
Although a casual observer
might conclude that municipal
utilities would behave differently
because they are not subject to the
same rate determination system,
in practice many municipals are
strongly influenced by revenue
drivers, contributing, for
example, to the general operating
budget of the local government. In
addition, municipal and
cooperative utilities often heavily
influenced by their relationships
with generation and transmission
(G&T) ‘‘parents,’’ in some cases
bound to restrictive contracts that
sharply limit their ability to
introduce new service, integrate
renewables or seek innovative
commercial partnerships.
The rate-case approach to rate
setting remains dominant but it is
market-distorting. There is no
natural economic mechanism
pushing the regulated utility to
invest only in elements that drive
efficiency in business operations.
Unlike in the mid-20th century,
this approach now no longer
maximizes economies of scale.
The net result is investment
skewed toward generation and
transmission while demand
reductions and consumer-side
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
89
[(Figure_5)TD$IG]
Figure 5: Using New York State as an example, we demonstrate some of the ways to graphically represent the market composition and
utility entities. As with the chemical periodic table, each state ‘‘element’’ is represented with a diagram that distills key pieces of statespecific information into a single, quickly understood graphic. Total revenue in New York are $21.5 billion, with ‘‘large’’ utilities (those with
annual revenue from electric sales greater than $250 million) representing $19.6 billion. The upper right displays the breakdown in large
utilities by class. The lower left shows the executive and legislative political makeup of New York, with a Democratic governor. Republicancontrolled Senate and Democratic-controlled Assembly. The New York Public Service Commission consists of up to 5 commissioners
appointed by the governor to 6 year terms
initiatives are underutilized even
when there are well-recognized
economic benefits outside the
confines of the utility’s selfinterest.
90
N
ew York State has
captured recent headlines
with a high-profile proceeding—
‘‘Reforming the Energy
Vision’’—that has explicitly
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
called into question at least two
aspects of the traditional model.
As described in the order
initiating this proceeding, the
state challenges ‘‘the
The Electricity Journal
assumptions that demand is
inelastic, and that economies of
scale make central generating
stations the most economic way
to meet power needs.’’21 It
describes the resulting
proceeding as an initiative that
aims ‘‘to align electric utility
practices and our regulatory
paradigm with technological
advances in information
management and power
generation and distribution.’’ But
the fact that this far-reaching
initiative can be led by the Public
Service Commission is as much
rooted in the unique structure of
New York’s market as anything
else. Placing these observations in
the right context requires a new
way of understanding the
electricity market.
V. Visualizing the
Market Landscape,
Corporate Structure and
the Political Picture
A comprehensive
understanding of the electric
utility industry landscape must,
of necessity, show that landscape
in state-by-state detail and also
show those states in meaningful
relationship to one another. Using
the metaphors of the periodic
table of chemical elements and
molecular structure, E9 Insight
has developed a suite of visual
data tools that together bear these
principles in mind. The Periodic
Table summarizes key
information regarding:
July 2015,
Vol. 28, Issue 6
1. Market landscape: How much
of the market is consolidated into
large utilities? How is the market
divided by utility class and
structure?
2. Corporate entities: How many
utilities operate within the state?
What are the ownership
models?22
3. Political governance: How
many commissioners are there
and how long do they serve? Are
they appointed or elected? What
is the political makeup of the
executive and legislative bodies
within the state?
4. Policy frameworks: Are there
existing mandates or goals
addressing renewable energy,
energy efficiency and new
technologies? Are there
significant penetrations of
enabling technologies?
he ‘‘Periodic Table of State
Policy’’ (Figure 4)
encompasses highlights of this
information. A more detailed
summary of each state provides
additional information and
extending the analogy to the
molecular level, the diagrams
offer a visual schematic of the
specific entities within the state
(see Figures 6–8). These are visual
tools to place in context all
essential aspects of the utility
landscape and its ecosystem at
once, facilitating market
segmentation and policy
analysis.
here are three organizational
elements of the Periodic
Table worth noting. First, the
states are grouped into 10
‘‘families’’ based on regional and
T
T
market structure. (Texas has
fiercely defended the physical
isolation, and therefore
regulatory independence, of its
grid, and so stands alone as a
family of one.) Second, within
each family, states are weighted
according to size of retail revenue,
with the largest states on top.
Third, moving from left to right
follows a progression from more
vertically integrated states to
generally more competitive
states.
The Periodic Table quickly
reveals unique characteristics and
relationships within each family.
For example, Tennessee and
Nebraska are prominent for their
lack of vertically integrated
utilities, dominated by TVA and a
state power district, respectively.
The ‘‘molecule’’ diagram
(Figures 9–10) offers a schematic
with succinct representations
showing the relative dominance
of utilities and their distribution
across the classes.
These representations, taken as
a group, are not in and of
themselves an answer for those
seeking to understand the utility
ecosystem. Rather, they offer a
framework more directly suited
to the necessarily
multidimensional analysis
required to represent a holistic,
interconnected system. The suite
of tools surrounding the Periodic
Table of State Policy represent a
new way to comprehend and
dissect the complex utility
landscape at both macro and
micro levels. Scenario
development and regulatory
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
91
[(Figure_6)TD$IG]
Figure 6: The Periodic Table can quickly demonstrate groupings of states according to specific variables. In this case, the states that have
undergone some form of market restructuring are show in green, largely clustered on the right side of the map
[(Figure_7)TD$IG]
Figure 7: Similarly, the states with elected commissioners are quickly illustrated or...
92
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
The Electricity Journal
[(Figure_8)TD$IG]
[(Figure_9)TD$IG]Figure 8: States with Renewable Portfolio Standards
Figure 9: The New York ‘‘molecule’’, with each large utility scaled according to size. The gray ring in the background represents the
footprint of the remaining smaller utilities
July 2015,
Vol. 28, Issue 6
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
93
[(Figure_10)TD$IG]
Figure 10: Looking across the United States, the overall diameter of the shaded circle for each state is scaled to the size of the market for
electric retail sales. The corresponding gray ring indicates the footprint of the small utilities, while the large utilities are represented in
colored circles (Investor-owned in tan; competitive retailers in red; municipal in dark blue and cooperatives and other public entities in light
blue. As examples of how this visualization can be revealing, California has almost no gray ring because most of the market is controlled by
large utilities, whereas South Dakota is comprised entirely of a gray ring, because no utility there crosses the $250 million threshold in
retail sales. Similarly, the diversity of competitive retailers in Texas is immediately striking
predictions based on this analytic
framework are better positioned
to identify the likely outcomes of
various strategies or policy
interventions. Just as the chemical
elements combine to create many
different compounds, policies
and markets can combine with
startling results.
VI. Conclusions
These visual representations
are proving to be useful at several
levels. Businesses and advocacy
groups looking to introduce
technologies such as ‘‘smart
home’’ innovations have used
them in the development of their
strategies. National laboratories
and federal agencies seek to
94
identify gaps between the visions
for a more resilient, sustainable
and reliable electric grid
espoused in federal legislation
and the on-the-ground activities
of the state commissions.23
Similar gaps may exist between
state legislation and their rule
making actions. The journey
connecting the market-defining
function of the commissions and
the ambitions of policy and
legislation is precisely the
adventure and opportunity
before us. When venturing across
that landscape, the policy
practitioner benefits from a tool
that describes it more fully and
meaningfully, just as every
adventurer carries a map in his
rucksack.&
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
Endnotes:
1. More on the Quadrennial Energy
Report can be found at the
Department of Energy’s Web site at
http://energy.gov/epsa/
quadrennial-energy-review-qer.
2. The White House, Office of the
Press Secretary, 2015, April 21. ‘‘Fact
Sheet: Administration Announces
New Agenda to Modernize Energy
Infrastructure, Releases Quadrennial
Energy Review’’.
3. While volumes have been written
about the history of the industry, a
useful overview on the details and
history of the ‘‘regulatory compact,’’
as well as the relationship between
technological change, the utility
business model, and regulation, can be
found within ‘‘Razing the Regulatory
Compact’’ at http://www.fortnightly.
com/fortnightly/2007/09/
razing-regulatory-compact.
4. While we recognize that there are
multiple possible configurations and
The Electricity Journal
classification systems, these classes are
defined by E9 Insight as a basis for
developing an industry taxonomy.
5. Smil, V., 2003. Energy at the
Crossroads. MIT Press, Cambridge. p.
125.
6. David, P.H., 1990. The dynamo and
the computer: an historical
perspective on the modern
productivity paradox. Am. Econ. Rev.
80 (2), 355; Smil, pp. 38.
7. Goldfarb, B., September, 2002.
‘‘Adoption of General Purpose
Technologies: Understanding
Adoption Patterns in the
Electrification of US Manufacturing
1880–1930’’. Dissertation Chapter
Department of Economics Stanford
University.
8. The history of Samuel Insull has
been chronicled numerous times. See,
for example, The Merchant of Power:
Sam Insull, Thomas Edison, and the
Creation of the Modern Metropolis.
John Wasik. Palgrave Macmillan 2006.
9. A thoughtful and recent review of
the historical background of
regulation is offered by William Boyd,
including the observation that, ‘‘By
the middle decades of the twentieth
century, anecdotal evidence
suggested that capture did in fact
represent a semi-stable end state for
all too many commissions.’’ Boyd, W.
Public utility and the low-carbon
future. 61. UCLA Law Revue 1614–
1708 (2014).
10. McDermott, K., 2012. Cost of
Service Regulation in the InvestorOwned Electric Utility Industry.
Edison Electric Institute. pp. 3–4
11. By 1970, the ‘‘bulk of U.S.
electricity generation was by firms
operating in the essentially flat area of
July 2015,
Vol. 28, Issue 6
the cost curve’’ and therefore offering
no improved economies from
increasing size. See Christensen, L.R,
Greene, W.R., 1976. Economies of scale
in U.S. electric power generation, J.
Polit. Econ. 74 (4), 655–676.
12. Adjustment Clauses and Rate
Riders: A State-by-State Overview,
2012. Regulatory Research Associates.
13. Federal Energy Regulatory
Commission. ‘‘Docket No. RM99-2000; Order No. 2000,’’ Dec. 20, 1999;
Docket No. RM95-9-000; Order No.
889, April 24, 1996; Docket Nos.
RM95-8-000 and RM94-7-001, April 24
1996.
14. 3,944 distinct, state-specific utility
entities reported retail electric sales in
2013 according to the most recent
available data from Energy
Information Agency, Form 861.
15. As an illustration, consider the
situations of commissions in
Minnesota and California. In
Minnesota, rules to implement
legislatively mandated energy
efficiency are primarily developed by
the state Department of Commerce,
then adjudicated by the commission.
In California the commission itself
commands a much stronger role in
developing the programs and rules to
implement legislation. The
development of the rules thus largely
happens within the commission’s
regulatory process in California, and
outside of it in Minnesota. Similarly,
the role of commission staff and
advisors vary greatly across the states.
16. As an example, New York State’s
commission has publicly embraced a
collaborative approach in recent
proceedings, notably the ‘‘Reforming
the Energy Vision’’ Initiative. By
contrast, media reports highlighted
the exclusion of solar company
representatives in major proceedings
in Florida during the same period.
17. Kiesling, L., 2015. Implications of
Smart Grid Innovation for
Organizational Models in Electricity
Distribution. Wiley Handbook of
Smart Grid Development.
18. A recent legal review summarized
these critiques succinctly, if
hyperbolically, as a system with an
‘‘approach to regulation that long ago
metastasized into a pathological
swamp of anti-innovation, rentseeking behavior. (Boyd, op. cit.)
19. Cichetti, Charles, J., Going Green
and Getting Regulation Right. Public
Utilities Reports.
20. Centolella, P., 2012. A pricing
strategy for a lean and agile electric
power industry. Electr. Policy
(February).
21. Order Instituting Proceeding,
April 25, 2014. CASE 14-M-0101 –
Proceeding on Motion of the
Commission in Regard to Reforming
the Energy Vision.
22. We use this term ‘‘publiclyowned’’ to include all utilities that are
not shareholder-owned.
23. Since 2007 and the enactment of
the Energy Independence and Security
Act, ‘‘It is the policy of the United
States to support the modernization of
the Nation’s electricity transmission
and distribution system to maintain a
reliable and secure electricity
infrastructure.’’ This fundamental
goals and related objectives have been
reaffirmed in legislation and reports
including The American Recovery and
Reinvestment Act, National
Broadband Plan and, more recently,
the Quadrennial Energy Review.
1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.06.009
95