How Market Power Gives Electric Utilities Political Power

In the pathway to 100% renewable energy lie electric utilities. Since the time of electrification until the 1990s, every electric utility was a monopoly — it owned everything to deliver electricity from the power plants (and sometimes even the coal mines) to the transmission lines to the substations to the distribution lines to the meter on your home or business. With a market monopoly, utilities have enormous political power to promote or avoid change.

Podcast: Ballot Initiative Shapes Iowa Town’s Fight for Local Power

Fed up with their electricity provider Alliant Energy, one of Iowa’s largest monopoly utilities, Decorah area residents decided to explore their options for pursuing cleaner, local energy and how the city could create a municipal electric utility for its 8,000 residents and business community. Advocates formed Decorah Power, a grassroots group of residents and community organizers making a clear case for municipal control, and the group has been garnering support for putting the public back in their public utility.

Paying Utilities For Performance

In most states with regulated, monopoly utilities, utilities are compensation based on two factors: energy sales and a return on capital spent, such as when they build a new power plant. Although energy efficiency standards have been layered on top of this model, the fundamental incentive for the utility remains “build things, get rewards for shareholders.”