Electronomics: Will regulators force utilities to change their business models?

By Jesse Berst

Electronomics is our ongoing discussion of the changes now underway in the economics of electric power. Two developments around the world suggest that utility regulators and policymakers may force change faster than we expect.

Ontario commission suggests sweeping changes

A newly released report chaired by economist Don Drummond makes some bold recommendations for the future of electric power in Ontario. If adopted, they could push Ontario's utilities toward a more market-based system.

Drummond chaired a group called the "Commission on the Reform of Ontario's Public Services." As the title implies, it looks at virtually every aspect of government-funded services. In the electricity sector, the commission recommends that Ontario's 80 local distribution utilities consolidate to create economies of scale. It suggests that these new, larger entities might also expand into other lines of business, such as supplying water.