The Dive Brief:
- GE is advocating a new business model for utility regulation, one that relies on a multi-year revenue plan that provides incentives for reducing costs.
- The report released Wednesday, Results-Based Regulation: A Modern Approach to a Modern Grid, says that the current model impedes a utility’s ability to recover fixed costs and discourages much-needed capital investment.
- Most utilities "operate under a regulatory model set in the first half of the last century,” said David Malkin, director of Government Affairs and Policy for GE’s Digital Energy business. “If we wish to build out a modern grid—one that meets these challenges and delivers long-term value to consumers—then we must rethink how utilities are currently regulated.”
Dive Insight:
GE rightly points to the elephant in the room facing utilities: that electricity sales are growing slowly at best, are flat in many instances and even declining in some service territories. In fact, the Energy Information Administration reports that total U.S. electricity sales fell 1.8% in 2012 and have fallen four out of the past five years.
