New essay: The Utility of Utilities
In a new essay, Matt Huber and I argue that in the coming era of clean energy growth, rather than yet more markets, the old-fashioned regulated monopoly utility model has something important to offer.
On Friday the state of New York announced the cancellation of three offshore wind projects totaling about 4 GW. Essentially, upstream manufacturing issues necessitated changes to the projects that would increase their costs. The project developers, though, can’t simply raise the price for the offshore wind subsidies they’re receiving from the state; it defeats the competitive ethos behind the meticulously designed auctions to solicit project bids.
But last Monday, another offshore wind project — Coastal Virginia Offshore Wind, the largest one in the country — reached an important milestone. The American-made ship to deliver and install the hulking turbines set sail from the Texas port where it was freshly constructed. The turbines this ship was designed to install are not the result of competitive bids for state-designed subsidies in state-run auctions. Instead it’s a project of Virginia’s regulated monopoly utility Dominion Energy, in accordance with a legislated demand for such a project from the state.
It’s exactly this distinction in how we finance and build clean energy infrastructure that is the subject of mine and Matt Huber’s latest essay, “The Utility of Utilities,” for Damage magazine’s second issue. What if that old-fashioned monopoly utility model is actually better suited than newfangled markets for the clean energy growth we need?
Readers might be familiar with mine and Huber’s many leftwing arguments for public power, especially of the Big variety like the Tennessee Valley Authority. Our preference remains in the public power camp, preferably with major projects funded with progressive taxation rather than the regressive tax of rates. But the “public utility” model itself, even when investor-owned like Dominion, embodies the core institutional model we think is needed.
Please head over to Damage magazine’s website to read “The Utility of Utilities.”
Climate activists are no fans of electric utilities. But the market-based alternatives that they often prefer—for rolling out renewable technologies faster than utilities—will not deliver infrastructural change at the scale we need.
