Cost-of-service states with vertically integrated utilities can manage a rapidly changing electricity sector by expanding opportunities for competition, even while maintaining the traditional vertically integrated utility. In fact, competition has been deployed successfully by cost of service states to meet customer needs, bring down costs, and encourage innovation. Building on these models, states can strategically create new opportunities for competition between utilities and third-party providers to manage the risks of a changing sector while seizing new benefits for electricity customers, utilities and third-party providers. This policy brief identifies ways that cost-of-service states can increase third-party participation or utilize competition to spur new utility strategies, products, and services.
Nicholas Institute for Environmental Policy Solutions