Nudging Utilities Into the Future

Two of the most important aspects of the Clean Power Plan (CPP) are the flexibility afforded states as they design compliance strategies and the plan's openness to all energy resources. A state can satisfy its emission-reduction targets through the use of cleaner or more efficient coal-fired generation, natural gas or nuclear power as well as through increased use of renewable resources and energy efficiency. Regardless of this flexibility and openness, investor-owned utilities (IOUs), which have dominated the electricity market for more than a century, tend to resist the imposition of additional environmental regulations. Some resistance is predictable as utilities have sunk trillions of dollars of investments into the construction of generation, transportation and distribution networks. While this resistance may be understandable, there are two significant rebuttal arguments to it. First, utilities have demonstrated remarkable resilience, particularly over the last three or more decades, to dramatic challenges to the traditional electricity industry. Second, public policy and state regulation have, for almost as long, promoted a clean energy economy. The CPP continues developing that clean economy and utilities have a role to play in a cleaner energy future. Let's look at both of these points more closely.