'Steel in the Ground': Greening the Grid with the iUtility

Abstract

As the United States addresses climate change through carbon reduction strategies, it must focus on the two major parts of our energy portfolio - oil and electricity. Electricity is a central focus because over one-half of all electricity generated is derived from coal-burning power plants, which are notoriously dirty. Other cleaner and renewable sources of electricity, such as wind and solar power, are available. However, over the last hundred years, the electricity industry has been constructed to serve large-scale, centralized and capital-intensive coal and nuclear plants.

There are good economic reasons for building large power plants. Economies of scale can keep consumer costs down as well as reap profits for utility shareholders. Unfortunately, large coal plants also produce the carbon dioxide that contributes to global warming. A further misfortune is that the infrastructure for transmitting and distributing large scale electricity favors precisely those coal plants that have become problematic. In short, any climate change strategy must reform the electricity infrastructure so that more environmentally sensitive resources can come online and contribute to our nation's electricity needs.

The green electricity grid, then, plays an important role in refashioning our energy future. The green grid can increase our use of clean and renewable resources, reduce carbon emissions, increase the use of smart technologies, and contribute to energy security. In order to achieve these goals, the electricity industry and its regulation must be changed significantly, as this Article advocates. Further, the Article argues that the new regulation of the electricity industry can become the model for the next generation of government regulation more generally as the old style of command and control regulation gives way to technological innovation and new forms of shared governance among industry and its consumers, as well as regulators.

Keywords: climate change, energy, regulation

JEL Classification: K23, K29, K32, K39