In an article for The Electricity Journal, NERA Managing Director Dr. Jeff D. Makholm discusses challenges with New York State’s “new regulatory model for the 21st century,” its Reforming the Energy Vision (REV) plan. Dr. Makholm explains four major concerns  with REV’s discussion of basic US regulation: (1) its problem in dealing with the historical context of US regulatory institutions; (2) its particular focus on electricity distribution, in spite of other regulated industries where US regulation has produced efficient and carbon-friendly advances; (3) its seeming preoccupation with two conceptual economic issues (“information asymmetry” and “capex bias”) that economic and legal scholars of US regulation effectively dealt with long ago; and (4) its subsequent complication of the problems associated with distributed energy, storage, and more advanced electronic management of prices and loads that could genuinely represent a marked advance in the regulation of the electricity business.

In the rollout of REV, the US regulatory model again showed its inherent and inevitable effectiveness: soliciting advice from a broad range of parties to satisfy public opinion, economic efficiency, and the capital markets in the provision of electricity distribution markets and services. Dr. Makholm concludes that while one should not be too critical of the REV plan, traditional US regulation—ironically much of which came originally from New York—is still the means to make those advances happen.