RATIONAL ELECTRICITY REGULATION: ENVIRONMENTAL IMPACTS & THE "PUBLIC INTEREST"West Virginia Law Review (2011)
AbstractPerpetually rising electricity demand, fossil-fuel dominance in power generation, and the intractable problem of economic externalities highlight the need to address environmental costs in electricity production and transmission. Utility regulators’ treatment of the environment—and courts’ posture toward that treatment—is now more important than ever. Enshrined in regulatory statutes is the duty to protect the “public interest.” Similarly enshrined in administrative law is the duty to act rationally. These bedrock duties have parted ways in electricity regulation, and the public is paying for it. This article highlights the inextricable tangles between the environment and “public interest” duties, and concludes that utility regulators can make rational decisions only by integrating environmental analysis into “public interest” analysis—or by dumb luck. Courts should, as a matter of administrative law, invalidate regulator decisions made under the prevailing practice of marginalizing, or ignoring, environmental costs. Part I of this article samples the authority and activities of the Federal Energy Regulatory Commission and state public utilities commissions to decipher how, as a practical matter, utility regulators interpret the “public interest.” Most modern “public interest” language, it turns out, boils down to three interrelated principles: (1) cost-minimization, (2) nondiscrimination, and (3) service adequacy. When determining consistency with this conception of the “public interest,” many regulators systematically exclude or marginalize environmental concerns. Part II explores the implications of a bedrock administrative law doctrine that requires agency actions to arise from thoughtful decision-making processes. Assuming the three principles articulated in Part I are reasonable interpretations of “public interest” language, regulators must still take a hard look at all material facts and issues. If the environment is material to cost minimization, nondiscrimination, or service quality, then the so called “hard look” doctrine demands environmental consideration. Part III describes a variety of scenarios where utility regulators might sensibly ignore the environment in executing their “public interest” duties. Such situations could arise under de minimis environmental risks; great scientific uncertainty; environmental costs that are accounted for elsewhere; other statutory obligations requiring environmental consideration; or a tenuous connection between particular environmental impacts and statutory “public interest” duties.
Publication DateSpring 2011
Citation InformationJeremy Knee. "RATIONAL ELECTRICITY REGULATION: ENVIRONMENTAL IMPACTS & THE "PUBLIC INTEREST"" West Virginia Law Review Vol. 113 Iss. 3 (2011)
Available at: http://works.bepress.com/jeremy_knee/1/