Do Utilities Have Right Incentives to Modernize Grid?

Electric power is our most capital-intensive industry, with more than a hundred billion dollars invested each year on infrastructure, according to the Edison Electric Institute. Investment needs are likely to grow. Utilities are looking to harden power systems to maintain reliability and resiliency in the face of cyber and physical security threats, deploy advanced digital technologies, and facilitate new services to meet expectations by some consumers for greater choice and control.

Grid modernization is a key part of this investment. New transmission and distribution technologies allow for greater visibility into utility operations, more control, faster healing, higher penetration of distributed energy resources, and an expanded role for customers as producers of electricity.

But do current regulatory approaches provide appropriate incentives for building a twenty-first century grid? Lisa Schwartz, Berkeley Law, asked three experts for their views: a financial analyst specializing in utility investment incentives, an expert in institutional frameworks for utility regulation, and a former public utility commission chair addressing broad policy issues.