Public Utility and the Low-Carbon Future

• Date: 01 August 2015

45 ELR 10788 ENVIRONMENTAL LAW REPORTER 8-2015

A R T I C L E

Public Utility and the

Low-Carbon Future

by William Boyd

William Boyd is an Associate Professor, University of Colorado Law School and

a Fellow, Renewable and Sustainable Energy Institute.

Substantial reductions in global power sector emis-

sions will be needed by midcentury to avoid signi-

cant disruption of the climate system. Achieving these

reductions will require greatly increased levels of nancing,

technological innovation, and policy reform. In the United

States, the scale and complexity of the overall challenge have

raised important questions regarding prevailing regulatory

and business models, with much scrutiny directed at the

traditional practice of public utility regulation. Recognizing

the many valid criticisms leveled against public utility regu-

lation and the important questions raised about the viabil-

ity of traditional utility business models, particularly in the

face of substantial growth in distributed energy resources,

this Article argues that a revitalized and expanded notion of

public utility has a critical role to play in eorts to decarbon-

ize the power sector in the United States.

In making this argument, the Article reaches back to ear-

lier understandings of public utility as elaborated by Pro-

gressive lawyers, legal realists, and institutional economists

during the rst half of the 20th century. Public utility, in

their view, was a distinctively American approach to the

“social control of business”—a third way between unreg-

ulated markets and outright public ownership that prom-

ised to harness the energy of private enterprise and direct

it toward public ends.1 As such, it was rst and foremost a

normative eort to ensure that the governance of essential

network industries, such as electric power, would protect the

public from the abuses of market power by providing stable,

reliable, and universal service at just and reasonable rates.

Viewed in this broader context, public utility is not a

thing or a type of entity but an undertaking—a collective

project aimed at harnessing the power of private enterprise

and directing it toward public ends. W hile the traditional

utility business model represents an important manifes-

1. See, e.g., J M C, S C  B (1926).

tation of public utility, it hardly exhausts the category. It

would be a mistake, therefore, to presume that there is only

one right way to organize and regulate the power sector

within the broad framework of public utility.

As this Article shows, the broader concept of public utility

gave way to a much thinner understanding during the 1970s

in response to a series of external challenges and a sustained

intellectual assault mounted by economists and lawyers. e

diminished notion of public utility that resulted has, it is

argued, distorted our views regarding the role of markets

and disruptive technologies in the power sector, particularly

in eorts to promote low-carbon electricity.

A more expansive and revitalized understanding of pub-

lic utility is essential to motivate and organize the planning

and investment needed to decarbonize the power sector by

midcentury, to coordinate and administer a grid capable of

integrating substantial amounts of intermittent renewable

generation and distributed energy resources, and to facilitate

experimentation and innovation at scale. e transition to a

low carbon electricity system over the coming decades can

only be realized if it is seen as a collective, political choice

that aligns technologies, business models, a nd regulatory

frameworks in a manner that capitalizes upon the positive

network eects of an increasingly integrated and participa-

tory electric power grid.

I. Electric Power and the Climate

Change Challenge

e U.S. electric power system is the largest in the world.2

It joins a diverse array of generation a ssets with high-volt-

age transmission lines, local distribution systems, and,

increasingly, active demand-side and distributed resources

to deliver a highly reliable service to millions of house-

holds and businesses in a manner that must precisely bal-

ance generation (supply) and load (demand) in real-time.

It is also the largest single source of greenhouse gas (GHG)

2. See MIT, T F   E G 1 (2011).

e full version of this Article was originally published as: William

Boyd, Public Utility and the Low-Carbon Future, 61 UCLA

L. R. 1614 (2014). It has been excerpted and updated with

permission of UCLA Law Review and William Boyd. Please see the

full article for footnotes and sources.

Copyright © 2015 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.