Utility Mission Creep

Troy A. Rule - Sandra Day O’Connor College of Law, Arizona State University
Vol. 56
December 2022
Page 591

Pressures related to the sustainable energy transition are increasingly prompting electric utilities to enter markets where they were never intended to compete. In recent years, some utilities have started offering residential rooftop solar installations or home energy storage systems to their customers with the promise of greater monthly savings than nonutility businesses can provide. Other utilities are building and operating public electric vehicle charging stations that directly compete with stations owned by nonutility companies. A few utilities are even making aggressive forays into community solar energy markets and pushing out private solar businesses. Fixated on short-term policy goals, many utility regulators are authorizing these incursions into private competitive markets even though such activities lie outside utilities’ original “mission” of providing grid-delivered electricity service. Unfortunately, allowing utilities — with their state-guaranteed rates of return, legal protections against most competition, and access to artificially low-cost capital — to enter competitive private markets is rarely cost-justifiable in the long run. Because of their state-provided advantages, utilities’ presence in such markets threatens to weaken competition, decelerate innovation, and ultimately inflate prices in affected industries in ways that slow the nation’s transition to a sustainable, carbon-free energy system. In light of these challenges, there is a growing need for statutory and regulatory rules that more clearly limit the scope of electric utilities’ permissible activities and expressly prohibit utilities from directly or indirectly venturing into competitive nonutility markets. By keeping electric utilities within appropriate bounds, such laws would better safeguard the competitive market forces needed to continue driving the sustainable energy movement.

View Full Article