Regulators Ruminate on Fading Monopolies

By Published On: November 21, 2013

In the face of a future distributed utility business model, the California Public Utilities Commission made another attempt to come to grips with its future regulatory role last week. Both utilities and state entities expect the power business to downsize, in terms of both transmission and generation. Meanwhile, regulation is designed for monopolies. This can hurt consumers, stifle the economy and lead to a “senseless self-perpetuating bureaucracy,” said former commissioner Susan Kennedy Nov. 14. Kennedy, now senior policy advisor with Alston + Bird, begged the question of what to do with a regulatory body if there’s no sunset legislation to put it out of business. “When does regulation end?” she queried. “You have to let the market get competitive.” Regulation “should be fair and balanced—and I don’t mean like Fox news,” said commissioner Mark Ferron. He is mulling over revamping the commission’s role to accommodate expected changes to the industry paradigm while promoting regulatory consistency as “critical to attracting investment capital.” Commissioners Ferron and Mike Florio largely sat back to listen as the commission hosted what it terms a “thought leaders” showcase. Mark Toney, The Utility Reform Network executive director, postulated that standards—like the renewables portfolio standard and new electric battery storage—can provide investor certainty and allow competition at the same time. The commission is not considering putting itself out of business, but adapting as the 100-year-old paradigm of railroads and energy monopolies is itself shifting gears, according to its recent public meetings. On Oct. 8, regulators hosted a public meeting on the changing role of regulated utilities with utility and agency executives. At that time, Ron Litzinger, Southern California Edison president, predicted utilities will be limited to the “wires business’’ of distributing electricity (Current, Oct. 10, 2013).

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