Government Energy Policy, Business and Technology

Incentives for Change: Why Utilities Continue to Build and How Regulators Can Motivate Them to Modernize

Renewable Energy World: Outdated utility financial incentives are inhibiting the transition to a clean energy future, increasing consumer costs, and stifling new technologies. Yet, this state of affairs is hardwired into the regulatory system.

Under current rules, utilities can earn more money on infrastructure expenditures like natural gas pipelines and electric transmission lines than on cleaner, customer-centric energy resources like energy efficiency, rooftop solar, and highly efficient electric heat pumps. Without changes to the way they are regulated and rewarded, utilities will continue to advocate for infrastructure over local energy resources because their fiduciary duty to shareholders requires it.

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