Changing Times for Electric Utilities

Two seemingly unrelated announcements drew much attention in the electric utility industry recently. First, the Edison Electric Institute and the Natural Resources Defense Council jointly recommended changing how utilities should be regulated. Second, Duke Energy announced it will sell 13 Midwest merchant power plants. These announcements are actually related, and arise because the traditional utility business model is crumbling, due to several factors: Load growth has declined, due to a slowing economy and greater use of renewable energy and energy efficiency. Utilities are no longer able to obtain economies of scale by building ever-larger plants. New regulations have resulted in… [more]