Facilitating conditions for the adoption of new regulatory technologies in the electric utility industry

Significant political, economic, and social changes occurred in the electric utility industry\u27s environment in the 1970s and 1980s. Traditional means of regulating the industry fared poorly. Technological change also occurred; new end-use efficiencies made electricity cheaper to conserve than supply. The soft energy path , identified by Lovins, offered many advantages to society, yet under existing means of regulation, it was not profitable for utilities. Eventually, new regulatory schemes to reward utilities for improving end-use efficiency were developed and adopted by some public utility commissions, but not others. To address the question of why regulation changes, existing and emerging regulatory theories are examined. Traditional political-economic theories such as capture, interest group, and regulator self-interest conceive of regulation as a marketplace activity where favorable outcomes are demanded and supplied. Emerging theories focus on the role of ideas in the regulatory process. Ideas have become increasingly important elements due to vastly-improved communications technologies. Theories about the role of ideas address issues of ideological behavior by regulators, the influence of academia, response to external signals, and the diffusion of innovations. Structural limitations such as the historical nature of a state\u27s political-economy and political competition are also recognized. From each of these theories, hypotheses are developed about a wide range of possible causal factors and/or facilitating conditions. Using statistical methods which view the adoption of incentives for demand-side management as a qualitative choice by regulatory commissions, a comparative state analysis is performed to determine which factors are related. The general finding is that the fabric of regulatory change is considerably more complex than earlier theories would predict. This is evident since no one theory achieves explanatory dominance. Almost all contributed in part, suggesting that regulatory change is the result of a combination of numerous factors. Interest group and historical origin of political-economy theories appear to be most capable of explaining the adoption of ratemaking procedures for demand-side management. The thesis concludes by considering whether future regulatory changes are likely to be influenced by the same factors, or explained by the same theories, examined herein