Breaking the gridlock: Rethinking policy for energy abundance

“Regarding electricity in the U.S., we decided as a country — really, policymakers from 100 years ago decided — that we were going to regulate electricity because we thought it was a natural monopoly and that the only way to do it is to strictly regulate the rates. As a result, we have very well-defined rates that you can charge and cannot charge, but you also have this very heavy-handed regulation of entry and exit. In most cases, you have one company that serves customers. This is a very backwards way to approach it.
We never got to experience creative destruction, to borrow a term from economist Joseph Schumpeter. The idea of creative destruction is that the necessary churn of inventions leads to new innovations.
Instead of having the industry compete for “first place” among consumers, we decided to essentially assume what that looked like and give single companies entire franchises, in some cases entire states, and not let anybody else compete. That was a recipe for stagnation.
For a while, it was workable, and we got the predictable effects. We did have stable rates. A lot of people credit the expansion of the grid itself to that model working because we basically mandated it to.
We're in a very different place now. The grid is expanded almost everywhere. We have pretty close to universal service. The question now is, can the industry move fast enough, and can it supply these new large customers, especially data centers?
We're talking about customers that are as large, in some cases, as a nuclear power plant showing up to the grid now and asking for service under this paradigm of universal service.
What we’re seeing with this is the technological change and the new demands from the industry colliding headfirst. It's almost like the tech industry is slamming into the regulatory brick wall that is the utility industry.
I think we should embrace a paradigm change; we should be flexible and move with it. One way to do that is to relieve companies of their obligation to serve, almost unraveling both pieces of what they call the regulatory compact.
The way it stands now, there's the obligation to serve everybody under fair rates, but there's also a monopoly protection that goes with that. It’s like a two-piece system that was supposed to move together.
We could undo both of those. We could say you're not obligated to serve these new customers who have new demands and unprecedented size. At the same time, we are going to allow someone else to do that.
The facts on the ground have changed to make it so obvious that we need a policy change. We've basically gotten by with a substandard regulatory environment for about 100 years, and it's not cutting it anymore. So, we should embrace change.”

https://travisfisher.substack.com/p/breaking-the-gridlock-rethinking