Nodal Governance of the U.S. Electricity Grid

By Gocke, Alison | Duke Environmental Law & Policy Forum, Spring 2019 | Go to article overview

Nodal Governance of the U.S. Electricity Grid


Gocke, Alison, Duke Environmental Law & Policy Forum


INTRODUCTION

Electricity is a necessity in the modern world. But as the recent example of Puerto Rico shows us, the system that delivers that electricity--the electricity grid--is vulnerable to failure.

As the U.S. moves into a future where electricity becomes even more central to our lives--powering our phones, computers, cars, homes, and essentially every private and public institution in the country--our electricity grid faces more threats than it ever has before. Climate change, (1) energy poverty, (2) cyber security attacks, (3) crumbling grid infrastructure, (4) and the massive grid modernization project required to support millions of new devices (5) all present challenges to the grid on an unprecedented scale. If not properly addressed, these challenges could lead to dire consequences. Contrary to conventional wisdom, these challenges are not ones of technology or engineering, but rather ones of governance. We have, for the most part, the mechanical systems we need to bring our electricity grid into the future. What we are missing, according to legal scholars (6) economists, (7) engineers, (8) and industry associations, (9) is a grid governance model that can make these changes happen.

The current proposals on the table often revolve around two stylized versions of grid governance and grid history. The first form of governance, associated with the formation and spread of the electricity grid beginning in the early twentieth century and extending through the 1980s, is known as the public utility or regulatory compact model. (10) In this version, the electricity grid is understood as a severely hierarchical, heavily regulated industry. Electricity is generated, transmitted, and delivered to end-use customers on a grid governed by the same monopoly owner and functioning in a single, top-down direction.

The second form of electricity governance is a neoliberal version of the grid. This model emerged during the 1980s and 1990s, when regulators embraced a market-based approach to electricity management. (11) During this time, the federal government broke electric utilities' monopoly grip on the wholesale side of electricity sales, forced utilities across the country to allow non-utility generators access to utilities' transmission lines, and established regulated wholesale markets to allow parties to buy and sell electricity at competitive prices.

Most academics and policy makers have bought into these two binary versions of grid history, debating whether modern grid problems should be addressed through a more robust or revised version of the regulatory compact, (12) or whether better market design and expanded competition is the answer. (13) Also, within the legal literature, the discussion translates into a federalism issue: should we look to the federal government (often associated with the neoliberal market model) to provide clear governance over the grid, (14) or should we promote experimentation at the state level (often associated with the regulatory compact model)? (15) Some have even adopted a cooperative federalism approach that attempts to reconcile these narratives. (16)

But these discussions are making a threshold mistake: assuming that either the command-and-control model or the neoliberal market model--both ultimately top-down, centralized governance systems--describes how the electricity grid actually works. In fact, neither of these models is correct.

This article argues that we ought to think of the U.S. electricity system as a decentralized, nodal network. Not just in the physical sense (with a grid infrastructure composed of a series of nodes where electricity is produced and consumed, interconnected by a web of transmission lines along which electricity is delivered), but also in the theoretical sense. Inspired by the nodal governance model developed in the world of international security law, (17) this article argues that the electricity grid is best described as a series of nonhierarchical relationships that rely on groups (or "nodes") of actors consolidating their power and using formal and informal connections ("networks") to manage a course of events. …

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