Renewing Electricity Competition

Abstract

The scholarly literature on law and social movements has historically focused on public law issues like environmentalism, reproductive rights, and race relations, while staying far away from business and firm behavior. Business behavior was easily understood as that of self-interested profit maximizers, and therefore left to the economists. Recently, however, social movement theorists have begun paying more attention to the business world. While traditional economic models can explain why businesses pursue higher profits, greater market shares, and superior regulatory climates, it is limited in its ability to explain how wish becomes reality. The formation and identification of market opportunities are products of social forces, and firms are part of that process — both shaping and being shaped by social dynamics which create and recreate the economic terrain.

This article joins that burgeoning literature by applying a social movements approach to the energy law field. Specifically, it looks to how voluntary Renewable Energy Credit (REC) sales — selling the “clean” in “clean electricity” — could restart the moribund movement towards increased electricity market competition (known as “restructuring”). While electricity restructuring gained considerable momentum from the late 1970s through the 1990s, the movement was crippled by the high-profile Enron collapse in 2001. Efforts to restart the debate have foundered as restructuring proponents have had no point of entry to connect with consumers or influence policymakers in states dominated by incumbent electricity monopolies. Voluntary REC sales, which entail sale of an electricity “product” that bypasses the physical transmission network, offers a “foot in the door” for new market entrants who can connect with consumers and reshape their public image free from interference by the extant monopoly. From a business standpoint, the benefit of entering the voluntary REC market is less about direct revenues or profits from the sale, the traditional economic markers of success. Rather, REC sales are valuable for reasons well-known to social movement theorists — they can establish relationships and alliances in previously untapped social arenas, and alter public understandings of concepts and ideologies critical to the firm’s overall interests.

Keywords: renewable energy, electricity, energy, environmental law, energy law, renewable energy credits