A common response to energy-market risk is a complex market infrastructure, with significant administrative effort and cost dedicated to managing the risks and ensuring that the market functions...
to customer information now monopolized by the utility. These energy service companies could market a complete environmental package (em solar photovoltaic panels for the roof or fuel cells for the basement. Much as in the computer industry, consumers would drive innovation. Meanwhile, an unaffiliated, regulated company would still perform the monopoly functions, such as transmission, distribution, and system dispatch.
Regulators would still play key roles under Arny's proposal. They would oversee long-term planning and intervene when the market fails to reach environmental goals. They would develop a package and bidding process for the "provider of last resort," which would sell retail energy services to customers that do not (or cannot) elect to participate in the market. An "uplift" charge to all would pay for important social objectives. Regulators could still approve environmental adders for polluting fuels, set aside a portion of generating capacity for renewables, or raise funds for additional efficiency measures.
Although it's difficult to predict what types of electric services consumers might choose in a fully competitive market, there's room for optimism. By putting customers in the driver's seat, creative energy service companies could tap public support for renewable energy and energy efficiency. t
David Lapp works as an energy policy analyst for the Environmental Action Foundation in Takoma Park, MD, a self-declared nuclear-free zone.
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