For Better Outcomes, Let`s Reward Utilities for Performance

THE TRANSITION TO a smarter, cleaner, more customer- centric electricity system has been accompanied by a lot of conflict. Examples abound, from recent fixed-charge skirmishes in Wisconsin and now Indiana, to FirstEnergy's attack on competition and clean air in Ohio, to Nevada's recent steps to rewrite the terms of existing net metering contracts.

These conflicts are a predictable result of the way we regulate utilities. The many challenges that are forcing electric utilities to reinvent themselves -- rapidly evolving technologies, increasing competition, changing customer needs and stricter environmental controls, among others -- require a new style of regulation. Adding incentives to standard regulation, as some states are considering, is a good start, but more fundamental reform will ultimately be needed. It's not too soon to start.

Many argue that utilities must evolve, but few seem to have a clear idea of what business models utilities are evolving toward...   ...more