Modifying the Virginia Regulated Investor-Owned Utility Model for the Common Good
MA in Intercultural Service, Leadership, and Management
This paper examines the structural challenges inherent in the Virginia regulated investor-owned utility market, operating under a traditional rate making model, when attempting to implement renewable energy and energy efficiency measures. In the broader context, the energy sector plays a massive role in the overall U.S. economy, and carbon emissions from energy consumption are linked to climate change. Therefore, solutions are needed to address the sustained health of the economy, energy sector, and our environment. Within the context of our new climate reality, this paper examines: the trends associated with energy efficiency and distributed renewable energy; the current electricity rate making model in Virginia; the threat electricity utilities face under the traditional rate design; and policy actions that can help modify the rate structure to align the interests of the energy sector and customers.
The goal of this paper is to provide research and recommendations to Virginia advocacy organizations involved in environmental and renewable energy work. A deeper analysis of the policy solutions and regulatory tools emerging in the energy sector can help create a strategy to transform the electric utility industry within the state.
Unless regulatory action is taken to modify the traditional rate structure, under which Virginia investor owned utilities operate, little progress can be made towards shifting to a sustainable energy future. This future, under new policy and regulatory interventions, can benefit all stakeholders involved in the production, consumption, and adoption of alternative renewable energy generation innovations and/or increased energy efficiency standards. For this reason, the state of Virginia should take proper policy actions to transform the traditional rate structure for investor-owned electric utilities. This paper recommends that investor-owned electric utility revenues be “decoupled” from the volumetric consumption of energy and that incentives are created to encourage adoption of energy efficiency measures and distributed renewable energy capacity. This will ensure the continued viability of electric utilities while embracing energy production/reduction strategies that benefit the common good.
Williams, Steven J., "Modifying the Virginia Regulated Investor-Owned Utility Model for the Common Good" (2015). Capstone Collection. 2830.