COAL-FIRED POWER PLANTS IN THE UNITED STATES ARE RESPONSIBLE for 10 percent of the world's carbon dioxide emissions. Consequently, any strategy aimed at reducing carbon emissions must address the electric industry. The electric industry, in turn, must reform itself, and the single most significant reform involves a change in an electric utility's mission. Historically, electric utilities were driven by one concern and one concern only – sell electricity. The mission was simple and understandable. Electricity consumption supported the economy: QED, the more electricity that was sold and consumed, the stronger the economy was. The traditional mission served the country very well for most of the twentieth century. Our economy was healthy and expanding; an electricity infrastructure was constructed and reliable; and electricity was abundant and cheap.

The electricity industry, except in its very nascent stage, never operated in a free, competitive market. Rather, it has been supported by a regulatory compact between government and industry. The regulatory compact, and the parties to it, must change to meet the demands of the new environmentalism. Government regulation must change to promote the public good of a cleaner environment. Utilities must change to sell energy services and products – not just sell electricity.

An Environmental Competition Statute (ECS) for power producers can assist forward-thinking utilities interested in investing and developing new technologies along three paths. The intelligent utility will (1) reduce carbon emissions, (2) increase energy efficiency, and (3) produce clean electricity.