An Institutional Approach to Electricity Sector Restructuring: The Case for Consumer Aggregation

Social and environmental problems attributed to current electricity sector restructuring structures are spelled out. The energy source choices and market power of large industrial and commercial users versus residential consumers are compared. An institutional analytic approach is used to reveal the best option to alleviate the social and environmental problems asso-ciated with electricity restructuring. Community ag-gregation emerges with great potential to achieve meaningful social and environmental improvement. Like it or not, the electrical sector in the United States is being revamped. Driven by technological change, large industrial market power and market rationality, the electricity regulatory regime is being deregulated and restructured. Restructuring has been legislated or is being considered in all but two states (Energy Information Administration [EIA], 1999a). Congress may consider national legislation during this session. Restructuring is being sold to residential con-sumers as an opportunity for improved choices and savings and as a pathway to a cleaner environment. Yet, restructuring continues the contemporary trend of decreasing prices for industrial consumers and increasing prices for residential consumers, resulting in further income polarization, and restructuring enables the industrial sector to choose the cheapest (i.e., the dirtiest) energy, increasing the environmental impact. The burden of purchasing clean energy, then, is placed on the residential sector. If the residential sec-tor is not able to choose new clean electricity, as from renewable energy sources, and opts for the status quo, there will be no environmental improvement. We seek a different arrangement, one that empowers residential sector market power to make clean energy choices