We Need 21st Century Public Policy for 21st Century Electrical Power

We urgently need to revamp our public policy regarding electrical power generation and distribution. We are saddled with both anachronistic policy and archaic infrastructure. This must change to enable the US to become energy independent and to take a leadership role in advancing global power technology into the 21st Century.

Our electrical power generation and distribution infrastructure is decades old, and falls completely short of supporting the demands of our digital information age, which relies on cheap, reliable power. Estimates I’ve read place our annual, domestic “reliability penalty,” the opportunity cost associated with power outages, at about $100B.

Our entire system is built upon a model which calls for centralized generation and distribution over an increasingly integrated power grid. A key tenet of this model is that it must be capable of generating and distributing enough power to meet peak demand, even though these peaks represent a small fraction of our overall usage (that is, waste). Another key tenet has been that electric power utilities have operated in accordance with an outdated economic model in which they serve as common carriers (largely regulated by the states) and are allowed to recoup, through billings and rates, the cost to produce such power—largely in a monopolistic fashion. The status quo provides scant incentive for investment and innovation; note the still-common practice of managing power supply shortfalls through “rolling” brown-outs and black-outs. That is a 19th Century solution, not befitting our capacity to achieve something much better, and certainly not conducive to thriving in the information age.

We must upend these fundamentally flawed underpinnings of our electric power industry, putting in place policies to incentivize competition, which will lead to creativity, innovation, reduced waste and lower energy costs. We already have the technology; we simply need to unleash it with more effective public policy. Today’s smart grid and micro grid technology will enable much more efficient, agile, responsive, robust, precise and reliable electrical power.

This issue transcends our own borders, and directly affects our national security. By taking the lead in modernizing our own electrical power infrastructure and associated policy, we will unleash America’s technology to close the growing gap between the world’s “haves” and “have nots,” certainly a root cause of regional instability and threats to the US. Today, two billion humans do not have access to basic electrical power. Unless we do something different, that number will double by 2050. We can and should position ourselves to drive global electrification over the coming decades, giving everyone on the planet access to basic electricity. This will pay huge dividends at home and abroad.

Resolving this problem is absolutely critical to achieving energy independence, energy security and sustained economic vitality.