Busting the Transmission Trusts

Deck: 

Creative destruction is coming, and it can’t be stopped.

Fortnightly Magazine - February 2013
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Over the next 20 years, the shape of our power grid will change—radically, in fact, as current indications suggest that federal regulatory reforms soon will give broader and clearer authority to state governments to influence what gets built.

And this restructuring will matter greatly, affecting both resources and risk.

On the resource side, over the last 100 years, we built a grid that enabled coal to generate half of our electricity—more than that in the heartland, less in the West Coast and Northeast regions. Likewise, the grid pattern of tomorrow will decide whether and how we get power from oil, coal, gas, hydro, nuclear, wind, or solar energy sources.

But the risk-reward equation will change even more. The reforms now planned will make the transmission industry much more competitive—though still regulated. But more important,  the changes ahead will allow a much broader set of investors to participate in the opportunity to earn regulated, but attractive financial returns—the sort of revenue stream that hitherto has been largely reserved for the utility sector. In spite of all the resistance—and thanks largely to federal regulators—the United States is engaged in the kind of creative destruction of an oligarchical business that has been the hallmark of its long-term economic vitality.

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