A Declaration of Electricity Independence
On LinkedIn, July 4, 2025
When in the course of rapidly growing and changing nature of demand for electricity, it becomes necessary for state governments to open the door to new approaches for the provision of electricity, they should declare the causes which impel them move on from the long-standing paradigm of heavily regulated monopoly utilities and administratively designed competition in organized markets.
We hold these truths to be self-evident, that our future depends upon plentiful electricity, that today’s fast-moving data center industry and slow-moving and increasingly fragile electricity sector cannot be easily be nor should they be aligned, that this electricity challenge is a complex economic problem, and that the best way to any address complex economic problem is by opening the door to more participants with more ideas seeking profit while trying to avoid losses in the marketplace. To prove this, let facts be submitted to a candid world.
· The growth forecasts are uncertain as is true for all forecasts. The higher the growth forecast, the bigger the likely error. We should not impose this risk on existing ratepayers when it could be mitigated by offering the data centers an alternative to the current limited choices.
· Rather than create more economic certainty for the regulated entities as a way of dealing with the risk of an uncertain forecast, we must create economic opportunity for new entrants that can attract the new growth with speed and innovation.
· A century of a tightly regulated industry has successfully squeezed some cost from the system but left out competition and innovation which could have brought dramatic change in the form of unimaginable products and services, superior reliability, and ultimately, far lower costs. We need to embrace alternatives which bring the promise of greater innovation.
· Benchmarking of the U.S. Postal System is a prima facie bad idea. (I’m talking about you, postage stamp T&D rates.)
· In a free, open, and competitive sector, we see limits to growth as larger size makes for a slower and less capable competitor. In the RTO world, bigger is always presumed to be better. Since RTOs are immune to competitive forces, we have no feedback on the downside of their size nor the risk of their growing “too large to fail”. We must assume therefore that bigger is not always better.
· The existing electricity sector cannot easily be repaired. Stakeholders are entrenched. Any material change will create winners and losers and unintended consequences. The best hope to is allow for new entrants that can operate outside of the existing sector similar to what Uber did with the taxicab industry.
· While unbundling of utilities was done with the best of intentions, it resulted in many more stakeholders dependent upon lobbying regulators to improve their position since regulators ultimately write the rules. More stakeholders bring more ideas that require regulatory approval. This is not a clear win for consumers. Consumers do win when there are competitors in a free, open, and competitive market. More competitors bring more ideas that get tested in the ruthless and fickle marketplace.
· In a regulated and tightly integrated sector, the number of solutions is severely limited. In a free, open, and competitive market, the number of solutions is limitless. Limitless solutions is always better.
· Legislators and regulators are continuously under pressure to fix the problems with electricity. That’s because we don’t have free, open, and competitive markets for electricity as we do in most sectors.
· In the electricity sector, important pricing and other market factors are influenced by brilliant experts, thoughtful studies, and detailed analyses. A free, open, and competitive market doesn’t care about personal brilliance, credentials, or the amount of detail in a spreadsheet. It only cares about results. Sometimes the biggest breakthroughs will come from unknowns with a bold vision. Who would have guessed five years ago that artificial intelligence would be such a big thing?
· Pricing is the most fundamental tool to ensuring a well-functioning marketplace. And yet we don’t know how a free, open, and competitive market would price electricity. We have regulator approved tariffs, administratively determined formulas, limits on how much market participants can offer, watchdogs to make sure that they don’t offer too much, and price caps. We must allow for true price discovery.
· Prices are often described as being “just and reasonable” or “affordable”. Those are completely artificial determinations, however. Earlier this year the price of eggs was up as much as threefold relative to just a few years ago. Eggs were still affordable, but consumers were angry because they knew what the price could be. Electricity consumers are forced to take what they are given. If a free, open, and competitive market for electricity ala eggs resulted in prices that were one-third of what they are today, would we would not consider today’s prices to be “just and reasonable” or “affordable”.
· According to the scholar and student of innovation, Matt Ridley, “Innovation is the child of freedom and the parent of prosperity.” We don’t have freedom in the electricity sector, but we need prosperity.
· PJM’s tariff is nearly 6000 pages long. Such a “market” can never be fast moving nor innovative.
· The correct amount of generation and the mix of that generation are always hotly debated. Everyone has an opinion but that’s all we have: opinions. Opinions and guesswork. We have zero market-based insights into these crucial issues.
· We look to the big shiny parts of the electricity sector for innovation, i.e., generation. Yet in many industries the transformative innovations came on the “software” side rather than the “hardware” side. FedEx didn’t innovate on the planes and trucks; they innovated with logistics. We have clamped down so tightly on the electricity sector that transformative innovations are not possible.
· Government and regulation are slow moving and they should be. The data center industry needs speed, so we need to get at least some of the electricity sector out from under the heavy burden of government and regulation.
· Too much electricity policy and regulation are guided by self-interested stakeholders. Self-interested stakeholders are not a reliable source of objective guidance. Their job is to increase the value of their position. If self-interested stakeholders were reliable then all forecasts would be correct and no one would ever lose money in the stock market.
· Free, open, and competitive markets are the best tool known to man for providing reliability. The RTOs are administrative designs however, not free, open, and competitive markets.
We, therefore, Advocates for Consumer Regulated Electricity, publish and declare that the electricity sector needs to see the creation of new, independent, competitive, and large-scale utilities and grids. This is what we call “Consumer Regulated Electricity” or CRE. CRE isn’t a partisan proposal nor is it a bipartisan proposal. CRE is an American proposal.
We must have more economic freedom and independence in electricity. Future generations are relying on it.
