Grid Governance in the Energy Trilemma Era: Remedying the Democracy Deficit

50 Pages Posted: 9 Mar 2022 Last revised: 3 Feb 2023

See all articles by Daniel Walters

Daniel Walters

Texas A&M University School of Law

Andrew N. Kleit

Pennsylvania State University

Date Written: March 7, 2022

Abstract

Transforming the electric power grid is central to any viable scenario for addressing global climate change, but the process and politics of this transformation are complex. The desire to transform the grid creates an “energy trilemma” involving often conflicting desires for reliability, cost, and decarbonization; and, at least in the short run, it is difficult to avoid making tradeoffs between these different goals. It is somewhat shocking, then, that many crucial decisions about electric power service in the United States are made not by consumers or their utilities, nor by state public utilities commissions or federal regulators. Instead, for much of the country, those decisions are made by entities known as regional transmission organizations (RTOs). These RTOs, which straddle and blur the boundary between private and public methods of social ordering, establish and run wholesale electricity markets, coordinate dispatch, keep the grid in balance, and plan infrastructure for the grid of the future. These responsibilities put RTOs at the center of the energy trilemma—a position that sits in significant tension with their ambiguous status, incentives, and accountability.

To fully understand how RTOs work and the role they are playing in the energy transition, it is necessary to examine where they came from, what assumptions animated their creation, and, finally, how those assumptions have been undermined by the changing landscape of the energy sector. This article aims to both explain what RTOS have become and highlight what might need to change to make them effective arbiters of the tensions at the heart of the energy trilemma. Our central argument is that RTOs emerged as institutions wedded to a peculiar model of democratic governance—corporatism—that no longer fits in the trilemma era. Corporatist governance lodges responsibility for negotiating public policy in an exclusive committee of representative stakeholders from the private sphere, and this neatly encapsulates the historical roots and contemporary practice of RTOs. However, we argue that the challenges facing the corporatist model of grid governance have become intractable, as the energy trilemma has not only raised the stakes of the tradeoffs involved but has also introduced new tradeoffs and new stakeholders who have no seat at the corporatist table. As a result, a democratic deficit threatens to impede efforts to navigate the energy trilemma unless reforms are implemented—specifically, reforms to make RTOs more open and responsive to the full range of stakeholders in the energy trilemma era.

Keywords: climate change, RTO, grid, FERC, corporatism, regulation, pluralism, democracy, energy, electric power, utilities, administrative law

Suggested Citation

Walters, Daniel and Kleit, Andrew N., Grid Governance in the Energy Trilemma Era: Remedying the Democracy Deficit (March 7, 2022). Alabama Law Review, Forthcoming, Texas A&M University School of Law Legal Studies Research Paper No. 22-68, Available at SSRN: https://ssrn.com/abstract=4051765 or http://dx.doi.org/10.2139/ssrn.4051765

Daniel Walters (Contact Author)

Texas A&M University School of Law ( email )

1515 Commerce St.
Fort Worth, TX 76102
United States

Andrew N. Kleit

Pennsylvania State University ( email )

University Park
109 Hosler Building
State College, PA 16802
United States
814-865-0711 (Phone)
814-865-3663 (Fax)

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