With renewable energy on the rise, many electric utilities dependent on fossil fuels are facing a crisis. Some are embracing the challenges necessary to implement clean energy, but others are resisting change. A new stories series from Audubon investigates the industry at this crucial time. Read Part 1, Part 2, and Part 3.
Public utility commissions (PUCs) are regulatory bodies critical to the climate fight. They exist in every state and have been around for more than a century, making sure that utilities provide electricity at just and reasonable rates. Yet they are largely unknown. Most people interact with them only through their electricity bill. But behind the scenes, the agencies are key players in regulating the energy supply and therefore the United States' carbon emissions.
Every state has different rules for how its PUC (also known as a public service commission or utility regulatory commission) operates. Usually comprised of fewer than 10 commissioners appointed by a governor or elected by voters, and supported by sometimes hundreds of staffers, the authorities manage a state’s electric grid. This work is technical and esoteric. Commissioners calculate electricity prices, manage energy efficiency programs, and regulate new energy sources, including home solar panels.
Most of this work is invisible to consumers, occurring behind the scenes of the power outlets and light switches in our homes. But their contributions are pivotal as states transition from fossil fuel to clean energy to meet climate targets in 30 states so far. To get there, energy producers will need to phase out older coal- and gas-burning power plants and build in new renewable energy sites. This is a complicated task that will require PUC expertise, authority, and input.
While some PUCs have gotten started on this work, they could be doing more to address climate change, experts say. PUCs could be using the tools they already have—for example, calculating the cost of different energy sources—to direct the utilities they oversee to support renewable energy development and to limit greenhouse-gas emissions.
“At this point, public service commissions should be changing their mandates,” says Stephanie Eyocko, an energy industry analyst. Keeping global temperatures from rising more than 1.5 degrees Celsius by limiting emissions from the energy sector, she says, “definitely needs to be included as one of the guiding stars that public utility commissions have.”
Admittedly, commissioners using their regulatory tools to manage greenhouse-gas emissions would be a shift from their founding purpose: to prevent utilities’ abuse of power. When PUCs came into existence at the turn of the century, governments allowed electricity providers, including many of today’s investor-owned utilities, to operate monopolies over the grid as long as they provided affordable, reliable power. Those governments set up PUCs to make sure utilities don’t hike rates to take advantage of consumers who need electricity to survive.
Over time, though, the grid has evolved significantly. Consumers’ demand for electricity has increased. How we produce electricity has changed, and so has knowledge of how producing that electricity affects the Earth’s climate and its inhabitants: In 1968 Lyndon B. Johnson’s science advisor warned the electric utility industry that rising carbon emissions could trigger catastrophic climate effects. Electricity generation now accounts for a quarter of the country’s greenhouse-gas emissions, a number that needs to fall precipitously to avert climate crises.
There’s a fair argument that PUCs shouldn’t only prevent utilities from unfairly raising electricity costs, but also push them to protect consumers’ futures. Legislators in Maryland, Colorado, Hawaii, Rhode Island, Maine, and Massachusetts agree. Each recently enacted legislation requiring PUCs to consider the effects of climate change and help advance policies that address the crisis. “The states that have been most effective in advancing renewables and strong greenhouse gas [limits] have done it through legislative mandate,” says David Littell, a former commissioner of the Maine Public Utilities Commission.
Sometimes these directives are broad and permissive. In Maryland, for example, last summer state lawmakers passed House Bill 298, which directs the PUC to consider “the protection of the global climate.” The commission was already evaluating how it could modernize the grid and reduce costs by looking into energy storage, electric vehicles, and time-of-use rates. It recently approved applications for offshore wind. Now it has a mandate to further integrate climate costs into its work.
In other states the mandates relate to specific laws. In Rhode Island, commissioners are evaluating how to implement a new legal target, set last summer, to reduce emissions to zero by 2030. The state PUC has some experience in this area. It's already responsible for implementing a cap-and-trade program to reduce emissions across the Northeast and Mid-Atlantic known as the Regional Greenhouse Gas Initiative. Because of that program, “some of the costs of carbon pollution in the electric sector are already included in the market price,” says Abigail Anthony, who serves on Rhode Island’s public utility commission and the nonprofit National Association of Regulatory Utility Commissioners board. Now the state can incoporate more.
There is room for boldness in what they consider a climate cost. Anthony argues that “the societal cost of carbon pollution,” such as stronger storms and rising seas, that are not reflected in the market can “rightfully can be attributed to electricity consumption.” PUCs could include these costs in pricing electricity calculations, she says.
Whether or not they're directed by the state, commissions have more power than they're currently using. “Commissioners have discretion in the costs that they consider, and they're not fully taking advantage of it,” says Alicia Brown, an energy analyst with Savannah, Georgia, a city pushing the state's largest energy provider to source more clean electricity. Under existing statutes many could ramp up programs that incentivize consumers to purchase energy-efficient appliances or reduce electricity use when demand is high, Brown says. And reconsidering energy costs to include fossil fuels' effects on the climate and consumers could result in new efforts to meaningfully reduce emissions and develop renewable energy, say both Eyocko and Brown.
Still, most PUCs exist to evaluate the economics of electricity, not the costs to people from the consequences of climate change or damages to the environment. “The commissions really aren't designed [to] and really don't effectively accelerate cleaner generation and grid modernization,” Littell says. “They're designed to regulate the status quo.” But given the commissions’ purview and expertise, that might be changing, and we could soon find that the agencies can learn some new tricks.