Regulating electric utility companies to ensure that they act in the public interest is a messy proposition at best. At worst, it’s a tangled web of corruption and political maneuvering, aimed more at calming a hungry beast than ensuring fair rates and reliable service.

Regulation of electric utilities began in recognition of the economic power utilities wield as providers of a service that is so central to our lives. In theory, regulation prevents them from exploiting that power for selfish purposes, but one-hundred years after utility regulation began, we still struggle and often fail, to maintain the upper hand.

Part of that struggle is the sheer enormity of the task at hand. U.S. investor-owned utilities hold more than a trillion dollars in assets on their books, and the real value of those assets to our economy is many times larger.

The real failure of electricity regulation in the United States is a failure of perspective. We still view our electric power system in one dimension, as if power can only flow from central power plants to the rest of society. The few, small allowances we’ve made for customers to install solar panels on their homes only hint at the potential the grid holds for interactivity.

It is time to begin transforming our electric power grid into a fully interactive system of two-way power flows – an energy internet, of sorts. Imagine a system in which tens or hundreds of thousands of small energy devices stood ready to provide whatever the grid asked for, whenever it asked for it.

Some early musings on this topic have given rise to buzzwords like “smart grid” or “grid wise” in the United States, but such efforts have amounted to thinly veiled attempts by utilities to increase their control over the grid.

The real promise of an internet-style power grid is in removing central control, just as the internet did, empowering all participants to contribute to the system when they have more than they need, and take from the system when they don’t.
This internet-style architecture for electric power is under development around the world, particularly in Denmark and the Netherlands, where they have deployed what they are calling “active” power grids. Their systems have enabled faster growth of small power systems, and with it, vast improvements in the efficiency of their electrical generation. More importantly, their system invites thousands of new participants into the field of electric power provision, ensuring a more democratic energy system than could ever be possible with central control.

If you are a tech-head like me, there's a good paper on active distribution grids here.