The climate is changing and so must our energy sources. But how do we get there? Who decides when and where to build new power stations across the country? And critically, which resources should power those stations — coal, gas, or the sun? When it comes to the climate crisis, public service commissions (PSCs) are the most important state agencies many people have never heard of.
In 2020, U.S. grids were powered by eighty-eight percent nonrenewable energy and twelve percent renewable energy.1 In large part, these energy profiles are an amalgamation of the scattered decisions by 201 state public service commissioners across the country.2 Although the federal government has asserted authority over certain energy resources, such as nuclear power plants3 and hydroelectric dams,4 decisions about how we power the electric grid are primarily left to the states.5
The climate crisis must be solved through thoughtful energy solutions. Unfortunately, although states’ energy decisions affect the climate, the climate does not always affect states’ energy decisions. PSCs are creatures of habit and have developed case law, administrative procedures, and staffing decisions for a century through an economic lens. This narrow focus is due to PSCs’ traditional economic mandate to hold in check the monopolistic market power of utility companies and serve as a proxy for real-world competition. Even when given authority to regulate environmental and climate issues, these agencies have neither a road map nor adequate resources to do so. While a few state PSCs have successfully embraced their role in the climate solution, they stand as the outliers. Most state PSCs remain entrenched in their traditional economic mandate, refusing to consider the impacts of their energy decisions on the climate and, at times, undermining the will of their electorate.
This Chapter studies the conflict between the historical mandate of PSCs and the modern movement of climate policy and politics, explaining how PSCs continue to resist their role in solving climate change, despite explicit environmental mandates and increasing pressure to act on the climate.6 Section A introduces the problem, explaining what and who state PSCs are and why their traditional economic role conflicts with the present climate call to action. Section B studies recent PSC orders and highlights how many PSCs continue to resist any role as an environmental regulator. Finally, section C proposes solutions to this problem. In the short term, states should override the decisionmaking processes of their PSCs by instituting clean energy standards. Although blunt and imperfect policy tools, these standards are effective and necessary. In the long term, states must target the root of the resistance and modernize a century-old administrative bias by providing explicit climate-related directives, workable objectives, and external support from all three branches of government.
A. Understanding the Problem: The Mismatch Between the Historical Mandate of PSCs and the Modern Movement on Climate Change
1. What and Who Are PSCs? — To understand the role of state PSCs, it is helpful to consider the companies they regulate. Utility companies stand as outliers in a national economy fueled predominantly by free-market competition. These government-sanctioned monopolies provide modern-day requirements such as water, electricity, and telecommunications.7
Electric utility companies are considered “natural monopolies” because the high upfront cost of energy infrastructure makes competition challenging.8 Another explanation of why states grant utilities monopoly status is that the alternative is simply too messy and too unjust. If anyone could start their own electric utility company, a few problems would inevitably result. First, competing companies would string up their own sets of wires, leaving a tangled mess of poles and wires on every block. And second, a savvy utility owner would service only densely populated cities rather than expend miles of wires for a single rural customer. In the early days of electric utilities, both scenarios resulted.9 Thus, starting in the early twentieth century, states allowed a single utility company to own and operate power generation, transmission, and distribution within a region. As a result of this exclusive market power, states recognized the need to provide agency oversight to protect customers from discriminatory and monopolistic prices.10 Thus, PSCs accepted their new powerful role as energy regulators.
In a short amount of time, every state enabled its own PSC to oversee the energy regulatory process. These agencies act in a quasi-judicial manner, with three to seven commissioners holding hearings, reviewing evidence, and ruling on what costs proposed by the utility companies may be passed on to electric customers.11 Commissioners have the final say at the agency level, while staff members, administrative law judges, and other specialists typically aid decisionmaking.12 Currently, there are a total of 201 commissioner seats on state PSCs around the country.13 Thirty-nine states appoint their PSC commissioners (typically through the governor), while the remaining eleven states elect them.14
PSCs have varying rules and names (such as the Connecticut Public Utilities Regulatory Authority or the Illinois Commerce Commission), yet they share many similarities. For one, PSCs use a comparable calculation when setting customers’ rates. They link profits to capital investments,15 typically allowing between a nine to ten percent return on equity.16 And, importantly, state PSCs generally share the same mandate: ensure customers’ utility rates are “just and reasonable.”17 This language is the core charge of PSCs and has guided their decisionmaking for nearly a century.18 This “just and reasonable” standard reflects why PSCs exist — to hold in check the monopolistic market power of utility companies and serve as a proxy for real-world competition.19
In the infancy of utility regulation, courts disagreed about the meaning of the nebulous phrase “just and reasonable.” In 1944, the U.S. Supreme Court provided some guidance when it reviewed the Federal Power Commission’s rate order under a comparable “just and reasonable” standard.20 According to the Court, this standard required energy regulators to balance investors’ and consumers’ interests, ensuring the return on investment was “sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital.”21 Almost immediately, state courts adopted similar instructions for their state utility regulators.22 Since then, this economic balancing act between shareholders and ratepayers has justified construction of nuclear power plants,23 adoption of electric vehicle infrastructure,24 and everything in between.
PSC decisions dictate the country’s energy profile. State PSCs regulate infrastructure construction either directly or indirectly. For direct regulation, power utilities generally must obtain a certificate of public convenience and necessity from the PSC before constructing an electric generation station.25 PSCs may indirectly regulate the construction of power plants through approval of infrastructure spending costs incorporated into customers’ electricity rates. In addition, PSCs oversee and approve utility companies’ integrated resource plans — documents that lay out how, when, and what the utility company will build to ensure enough electric generation for its customers.26 These plans provide the road map for the country’s electric future, and thoughtful oversight by a state PSC can ensure affordable, reliable, and clean energy.27
Today, utility companies can have significant revenue28 and political clout,29 influencing both sides of the climate change debate. On one side, many utilities have partnered with electric vehicle companies to drive national adoption of electric vehicles and related infrastructure.30 In contrast, other utilities have used their capital to undermine rooftop solar initiatives,31 combat clean energy mandates,32 and build more fossil fuel–powered generation stations.33 While utility companies have been building and profiting off fossil fuels without internalizing the downstream consequences and costs for decades, their regulators — state agency leaders — have approved their actions at every step of the way. Thus, this Chapter is not about the utility companies; it is about the agencies that regulate them. It is about the relatively few people who sit on these commissions and make decisions affecting the global future, and it is about how these regulators resist environmental responsibility, exercising a chokehold on meaningful climate progress.
2. The Mismatch Between Mandate and Movement. — PSC decisions meaningfully affect our environment, but the environment does not meaningfully affect PSC decisions. For the entirety of their existence, PSCs have generally made energy-related decisions regardless of environmental impact,34 let alone climate impact.35 This disregard has significantly contributed to the modern-day climate crisis. Since 1970, the burning of fossil fuels has combined with industrial processes to contribute over three-fourths of greenhouse gas (GHG) emissions increases.36 In 2019, the burning of fossil fuels accounted for ninety-two percent of all U.S. anthropogenic CO2 emissions.37 And even today, state PSCs continue to approve hundreds of millions of ratepayers’ dollars to prolong the life of coal-powered generation,38 adding millions of tons of CO2 to the atmosphere.39
The resistance of PSCs to considering environmental impacts is predictable. PSCs are century-old creatures of economics, prioritizing low rates and reliable service. Since their inception in the early twentieth century, these commissions have been staffed with economic and engineering experts,40 and they have case law, procedures, and internal planning processes fine-tuned to assess the financial benefit and reliability of their energy-planning decisions.41 The professional backgrounds of PSC commissioners are generally not prescribed,42 sometimes leading to various experiences in unrelated technologies43 and livelihoods.44 Admittedly, solving climate change is a task any agency would struggle with, but PSCs are particularly poorly positioned for the job.
The unwillingness of PSCs to abandon their traditional mandate has forced environmental advocates to make predominantly economic arguments. For example, in PSC dockets today one can find the Arkansas chapter of the Audubon Society — a “national conservation organization dedicated to protecting birds” — offering market principles in support of large, distributed solar projects and motivating their bird-watching members to lobby their local PSC.45 Luckily for environmentalists, the economic arguments for renewable energy are increasingly easy to make.46 In the past decade, public demand, environmental advocacy, federal and state legislative policy, and private investments have driven renewable energy development up and costs down, allowing renewable energy prices to be competitive with those of traditional fuel sources.47 But the incongruity of a bird-watching group making economic arguments before a public utility regulator signals that the administrative process is out of whack.
In response to this mismatch between mandate and movement, some scholars have proposed policy changes to bring PSCs on board the climate fight, or in other words, “teach an old dog new tricks.”48 In 2014, Professor Inara Scott considered a variation on this mismatch problem, assessing how and why PSCs dodged opportunities to modernize the energy grid.49 She too concluded that the shortsighted economic foundation of the current regulatory structure inhibited development of these grid modernization projects because their approval required considerations outside of short-term cost recovery.50 In addition, Professor Michael Dworkin argues that the authority of PSCs to consider environmental impacts already exists.51 In 2001 and 2006, Dworkin and his team reviewed every state’s PSC laws to combat the “misconception” that PSCs are “solely economic regulators.”52 His research team identified existing laws in nearly every state permitting or requiring environmental considerations to some extent.53
Today, more than ever, advocates and state leaders are pressuring these agencies to act on the climate crisis. And today, more than ever, state PSCs are holding firm to their traditional economic mandate, exacerbating the divide between mandate and movement.
B. The Continued Resistance of PSCs to Climate Considerations
PSC resistance to addressing climate change is less about a lack of power, but rather a lack of willpower. Disinclined PSCs with vague environmental mandates — such as in Maryland and Wisconsin — will often narrowly interpret their governing statutes to avoid consideration of climate impacts. Even PSCs with clear mandates to consider the climate — such as in Hawaii and Iowa — can bristle at their new environmental role, finding ways to evade meaningful review. In contrast, PSCs eager to address the climate have interpreted their existing authority broadly, such as in Michigan. There is a growing trend of states updating their PSCs’ governing laws to explicitly require consideration of climate change and GHGs. Although a step in the right direction, recent PSC responses suggest these mandates will fall short absent a fundamental shift in PSCs’ institutional cultures and approaches to climate change.
1. Denying Responsibility to Consider Climate Change. —
(a) Maryland PSC. — Maryland has been at the forefront of action on climate change. In 2007, Maryland was an early participant in the Regional Greenhouse Gas Initiative (RGGI, pronounced “Reggie”), the nation’s first cooperative, multistate cap-and-trade effort to reduce GHG emissions.54 That same year, the state established the Maryland Commission on Climate Change, which brought in experts and stakeholders to develop annual climate change action plans.55 In 2013, the Maryland legislature became one of the first to approve offshore wind energy and revised its renewable energy portfolio standard to source twenty-five percent of its electricity from renewable sources by 2020.56 And in 2018, Baltimore became the first east-coast city to file a lawsuit against fossil fuel companies based on state common law claims, leading the way for twenty-seven cities, counties, and states to file similar lawsuits.57
Against this backdrop, in 2018, the Charles P. Crane Generating Station applied to the Maryland PSC for approval to shut down its coal-powered generation station and replace it with three combustion turbines fired primarily with gas.58 A public utility law judge issued a proposed approval of the project, and three environmental groups appealed the decision: Blue Water Baltimore, the Gunpowder Riverkeeper, and the Essex-Middle River Civic Council.59 The environmental appellants challenged the administrative law judge’s failure to consider climate change impacts as violating the statutory requirement to give “due consideration” to water and air pollution.60 The appellants warned that rising sea levels would affect the construction and longevity of the gas plant’s infrastructure and stressed that climate change is “the most pressing issue facing this state” and “must be front and center in all permitting decisions.”61
Upon consideration of the appeal, the Maryland PSC Staff denied any obligation to consider climate change. They asserted that no part of the governing statute “‘explicitly requires that a discussion of climate change be included as part of the approval’ . . . and [that] the Commission has never required any consideration of climate change . . . .”62 The Maryland PSC agreed with this position. It concluded that “[t]he statute does not specifically or generally require considerations regarding climate change” because the governing statute only required the PSC to consider “when applicable, air and water pollution.”63 This decision to approve a fossil fuel–burning power plant was not appealed and came two months after Maryland had become the tenth state in the country to commit to a fifty percent or greater renewable energy standard by 2030.64 The Maryland PSC’s denial of a legal obligation conflicted with the position of many scholars65 and took members of the Maryland legislature by surprise.66
(b) Other Examples. — The Maryland PSC is not alone in confining its existing mandate to exclude consideration of climate change. Farther west, Wisconsin has made it a stated “goal of the state that, to the extent that it is cost-effective and technically feasible, all new installed capacity for electric generation in the state be based on renewable energy resources,”67 and directs its agencies to consider the impact of their actions on the environment.68 In 2020, Wisconsin’s task force on climate change released a report calling for the PSC to track its progress to ensure a 100% net-zero carbon emission power sector by 2050.69
Around the same time, the Wisconsin PSC received an application to construct a gas-fired combined-cycle electric generation facility. Although the statute prohibits the Wisconsin PSC from considering the “impact of air pollution” if the proposed facility would meet the state’s air quality standards,70 the administrative law judge permitted evidence related to climate change in the hearing.71 On interlocutory appeal, the Wisconsin PSC overturned the administrative law judge’s decision, arguing that Wisconsin’s public utilities law drew “broad jurisdictional boundaries between the responsibilities of the Commission and [those of the Department of Natural Resources], and plac[ed] air pollution within the jurisdiction of the [Deparment] and outside the jurisdiction of the Commission.”72 When the Commission’s final order came out approving a new gas-powered plant in 2020, there was not a single mention of the plant’s potential impact on the climate.73
Even farther west, in a state generally less keen on climate issues, citizens of Montana have been pressuring their leaders to plan for climate change.74 In the spring of 2020, pressure trickled up into the state’s PSC, where then–Commissioner Roger Koopman motioned the Commission to open a docket to investigate the impacts of climate change on Montana’s electricity grid.75 Commissioner Koopman, while advocating for the PSC to host a climate change forum, admitted that the members of the Commission “tend to be . . . skeptics” on climate change, and recognized the fear of some Commissioners that the forum would simply be “packed with a bunch of ‘greenies.’”76 In opposition to the climate change docket, Vice Chairman Bob Lake stressed his belief that the Commission lacked legal authority to consider climate change, given it is “basically an economic agency.”77 The motion failed 3–2. In all fairness, Montana’s legislature has yet to pass an explicit directive to its PSC to consider the environment, as the state’s PSC is exempt from the state’s requirements to account for environmental effects.78 But once again, the agency’s traditional mandate overpowered any opportunity and willingness to consider the climate.
2. Avoiding Their Role in Climate Change. — In response to this denial of authority, there is a growing trend of states enacting legislation explicitly requiring PSCs to consider the impacts of their decisions on climate change. For example, in response to the 2019 Maryland PSC Order discussed above, the Maryland legislature passed legislation unambiguously instructing its PSC to consider GHGs “based on the best available scientific information recognized by the Intergovernmental Panel on Climate Change.”79 This is only the most recent example of such legislation. In the summer of 2021, Colorado80 and Maine81 also passed legislation mandating climate change considerations in PSC decisions. Their laws came after Massachusetts enacted similar legislation updating PSC authority the previous March.82 The State of Washington83 and Washington, D.C.84 signed similar bills in 2019. Hawaii has had an explicit GHG mandate for its PSC since 2011.85 Oregon almost joined this list — after the state legislature theatrically failed to pass two climate bills due to Republican senator walkouts,86 the Oregon Governor issued an executive order directing the PSC to “exercise its broad statutory authority to reduce GHG emissions.”87
A clear legislative directive to a state’s PSC might appear like an obvious solution, especially when PSCs cite a lack of authority as the reason why they cannot (or will not) consider climate change impacts. Unfortunately, such a directive on its own is likely insufficient to counteract century-old administrative cultures and biases. A review of recent climate-related PSC orders illustrates how utility regulators can neglect even a clear mandate to consider the climate by conducting a superficial review of climate impacts.
(a) Hawaii Public Utilities Commission (PUC). — As an island state, Hawaii88 has perhaps the greatest reason to worry about sea level rise from the burning of fossil fuels. As early as 1977, the Hawaii State Legislature passed laws demonstrating a “manifest” intent to prioritize “renewable energy sources to reduce pollution in addition to securing the potential economic benefits and enhanced reliability of the State’s energy supply.”89 In 2007, the legislature updated its PUC’s mandate to permit consideration of an increased need for renewable energy in conjunction with its traditional economic mandate.90 And then in 2011, the legislature amended its laws to make air pollution considerations mandatory, requiring its PUC to consider “the effect of the State’s reliance on fossil fuels on . . . greenhouse gas emissions.”91
Despite clear direction and a longstanding legislative intent to move away from fossil fuels, the Hawaii PUC continues to resist meaningful environmental consideration. In 2015, Maui Electric, an electric utility company, applied for approval from the PUC to purchase coal- and petroleum-powered energy.92 When an environmental group attempted to initiate a hearing on the environmental impacts of the energy purchase, the PUC denied their motion.93 And when the PUC ultimately approved Maui Electric’s application, it asserted that the purchase was “anticipated to help accomplish the State’s policy goals of reaching 100% renewable energy by 2045.”94 In 2017, the Supreme Court of the State of Hawai‘i vacated the PUC’s decision to deny a hearing on the environmental impacts of Maui Electric’s application as a violation of the state’s constitutional due process,95 faulting the PUC’s hesitation to engage meaningfully in environmental consideration.
The court’s opinion had seemingly little impact. Two years later, the PUC was back before the Supreme Court of the State of Hawai‘i for failing to consider the reduction of GHG emissions in approving a power purchase agreement.96 Rather than make its own express findings, the PUC had simply restated the utility company’s assertion that the facility would contribute to the state’s renewable energy goals.97 Faulting the PUC for ignoring comments about increased GHG emissions,98 the court remanded the decision back to the agency with instruction to “give explicit consideration to the reduction of GHG emissions in determining whether to approve the Amended [Power Purchase Agreement].”99 Environmental advocates are left hoping that a second direct instruction from the state’s highest court to consider the climate will finally alter the calculus of Hawaii’s PUC.
(b) Iowa Utilities Board. — The Iowa Utilities Board’s (the Board) recent approval of the Dakota Access Pipeline demonstrates that an unwilling PSC can parse climate change impacts into nonexistence. The Dakota Access Pipeline carries oil from North Dakota to Illinois.100 It has received pushback all along its route,101. Although the pipeline was initially planned to run north of Bismarck, North Dakota, its developers rerouted the project south after opposition from Bismarck’s constituents who feared water pollution. T.J. Raphael & Eryn Mathewson, Bismarck Residents Got the Dakota Access Pipeline Moved Without a Fight, The World (Dec. 1, 2016, 2:15 PM), https://theworld.org/stories/2016-12-01/bismarck-residents-got-dakota-access-pipeline-moved-without-fight [https://perma.cc/YNV4-DRVA]. The new route runs through a critical water source for the Standing Rock Sioux tribe. Laura Sanicola, Illinois Court Vacates Approval of Dakota Access Pipeline Capacity Expansion, Reuters (Jan. 12, 2022, 7:25 PM), https://www.reuters.com/business/energy/illinois-court-vacates-approval-dakota-access-pipeline-capacity-expansion-2022-01-12/ [https://perma.cc/65EY-MEBJ]. and some of those fights have played out before state PSCs. In January 2015, Dakota Access, LLC petitioned the Iowa Utilities Board for a permit to construct 346 miles of the pipeline through Iowa.102 Environmental groups intervened and argued that granting the pipeline’s permit would promote the exploration of oil, increase GHG emissions, and delay transition to a carbon-neutral energy sector.103 In response, Dakota Access argued the Board lacked authority to consider climate change.104
The Board did not outright reject authority to consider climate change impacts. Rather, it so severely narrowed its scope of review that it concluded its decision — to permit the Dakota Access Pipeline — had no significant impact on climate change. The Board acknowledged that “[c]limate change in general is a very important issue,” but found “there is no evidence in this case that denial of the permit would affect climate change to any significant degree.”105 In just two paragraphs,106 the Board justified its decision by reasoning that denial of this pipeline permit would not reduce the demand for petroleum; oil delivery would “continue to take place regardless of whether this pipeline is built.”107 And so, through circular logic, the Board declared that permitting the Dakota Access pipeline would have no impact on climate change.108
The Board’s justification was familiar to the docket’s participants. Less than one month prior to the Board’s final permitting decision, intervenors petitioned Board Member Nick Wagner to recuse himself from the proceeding, asserting “he was resistant to the recognition of Climate Change because of his fear that it would damage his ability to be successful in running for political office.”109 Pursuant to Iowa law, Board Member Wagner himself ruled on and denied the motion to recuse. He explained:
[R]egardless of whether I believe climate change is caused by using fossil fuels, I believe climate change is not entitled to great weight in our deliberations in this proceeding. Fossil fuels are consumed because there is demand in the marketplace and granting or denying a permit in this proceeding will not materially affect the demand for oil products. The evidence in the record shows continued production and consumption of oil despite the possible existence of this and other pipelines, showing that the market and use of fossil fuels is driven by demand. I would also like to clarify that I would never put my personal interests ahead of the public interest.110
The permitting of the Dakota Access pipeline in Iowa serves as a cautionary tale that an unwilling PSC can still avoid meaningful climate review even under the guise of considering the climate.
3. The Counterexample. — Not all state commissioners have agreed with Iowa Board Member Wagner’s resolution that permitting a pipeline would have no significant effect on the climate. A recent decision by the Michigan PSC — a regulatory agency without an explicit mandate to consider climate change — stands in stark contrast.
In April of 2020, Enbridge Energy applied to the Michigan PSC for approval to replace a four-mile segment of “Line 5,” a 645-mile interstate oil and gas pipeline that has run through Michigan from Wisconsin to Ontario, Canada, since 1953.111 Enbridge filed a motion in limine to exclude evidence demonstrating Line 5’s adverse impact on climate change, arguing it was beyond the scope of the proceeding.112 The administrative law judge agreed with Enbridge and concluded the Michigan PSC lacked jurisdiction to consider the GHG emissions.113 On appeal to the Commission, the Michigan PSC Staff also supported Enbridge and the administrative law judge, urging the Commission to reject authority.114
The Commission disagreed. In contrast to the arguments made by Enbridge, the administrative law judge, and the Commission’s own staff, the Commission reasoned that it could not “separate the construction of the Replacement Project from the reason for doing so.”115 Under the state’s equivalent to the National Environmental Policy Act, the Commission concluded that it had a mandate to assess “the alleged pollution, impairment, or destruction of the air, water, or other natural resources.”116 When faced with the question of whether such environmental review included downstream emissions, the Michigan PSC stated: “While some would narrowly constrain the review of pollution to the construction of the tunnel and pipeline, such an interpretation is untenable.”117 And so, unlike its counterparts in other states, the Michigan PSC refused to apply a myopic scope to its authority, considering downstream GHG emissions and their resulting climate impacts. Ultimately, the juxtaposition of the reasoning of Michigan’s PSC and Iowa’s Utility Board indicates a PSC’s consideration of climate change can be a matter of will more than authority.
C. In Search of Solutions
Although this Chapter attempts to summarize national trends in electric utility law, the story of each state’s PSC is admittedly unique. The agenda of a state PSC may not always match a state’s political goals. As already shown, a state looking to address climate change can be undermined by an inflexible PSC.118 In contrast, a state with a fossil-fuel driven economy keen to slow renewable energy development can likewise be thwarted by a PSC loyal to its traditional economic mandate.119 To be sure, some state PSCs have risen to meet the climate challenge, especially when doing so aligns with the political will of their state’s electorate and government,120 and vice versa.121 Understanding the challenge with state PSCs and climate change requires an awareness of the political backdrop of climate change in the United States. This Chapter, of course, does not attempt to resolve the politicization of the environment and climate change.122 Rather, it addresses those states looking to make impactful progress on climate change yet thwarted by their own institutional bureaucracy.
Some scholars have proposed policy solutions aimed at incorporating climate considerations into PSCs’ traditional planning processes. Scott suggests states could mandate long-term resource planning that includes environmental risk management and analyses — or “teach an old dog new tricks,” so to speak.123 And, as discussed, many states are instructing their PSCs to explicitly consider climate change.
As the adage cautions, the difficulty is often with the dog, not the tricks. Solutions that aim to incorporate climate consideration into the existing PSC processes overlook the fundamental issue — the ingrained resistance of an agency with a century-old economic bias. Directing the agency to consider climate impacts faces many of the same struggles observed at the federal level.124 As examples such as the Hawaii PUC and Iowa Utilities Board suggest, forcing a state PSC to consider the climate does not always result in a thoughtful analysis of the impacts — nor a change in outcomes.
To meaningfully evolve a state’s energy decisionmaking process to account for climate change in the long term, states must reshape a longstanding institutional culture. But of course, climate action is needed now. And so, in the short term, state leaders should counteract existing institutional bias by instituting clean energy mandates.
1. The Long-Term Solution: Unlearning a Century of Institutional Bias. — State PSCs are conservative creatures of economics by design. States created these agencies in the early twentieth century with the simple mandate to keep rates just and reasonable, long before concerns about climate change or GHGs entered the public vernacular. These “childhood” years of the agencies fundamentally impact their long-term culture and mission.125 For over a century, state PSCs have developed case law, perfected internal quasi-judicial procedures, reviewed technical financial reports and projections, and hired experts, all with an eye on keeping customers’ lights on and electricity rates down — precisely as they were instructed. The agencies’ conservative mandate has in turn attracted professionals supportive of the traditional mission, reinforcing the conservative economic bias.126
To expect such agencies to solve the climate crisis suddenly, or even consider technical climate impacts when making decisions, is admittedly unfair. Indeed, PSCs across the board continue to be “wary” of the costs of grid-modernization proposals necessary to prepare for climate impacts, approving less than ten percent of the requested funding for such projects.127 But there is no other choice — the climate crisis cannot be solved without the modernization of the country’s energy grids, and as it stands, state PSCs hold the keys.
The unlearning of any agency’s institutional culture is challenging, but not impossible. This country has a history of agency recalcitrance in the face of new social mandates.128 But change has happened; agencies have evolved.129 Achieving an institutional culture shift requires explicit climate-related directives, workable objectives, and external support from the agencies’ allies in all three branches of government.
(a) Explicit Directives. — Despite the existing beliefs and attitudes of present-day commissioners, clear mandates coupled with effective enforcement and incentives can influence an agency’s internal direction.130 There is a growing trend of states updating their state PSCs’ governing laws to clearly require consideration of climate impacts. This is an important step in the right direction. At minimum, it provides a clear legislative intent and gives environmental advocates and PSCs a platform to stand on when promoting investment in renewable energy. But as this Chapter has exposed, explicit directives on their own are insufficient to change century-old habits. Without more, PSCs will continue to err on the side of economics over the environment.
(b) Workable Objectives. — Regardless of an agency’s willingness and authority to act on a particular goal, a new objective for an agency will only survive so long as it is achievable.131 To be workable, a goal must have identifiable targets. And critically, the agency must have the resources and expertise necessary to make technical and well-educated decisions about how to attain these targets.
Currently, many state PSCs do not have access to independent environmental or climate-specific expertise. Such a deficit forces PSCs to rely on utility companies and intervenors for information and proposed methods for understanding the impacts of energy decisions on the climate. This was evident in the Hawaiian PSC decision, which simply adopted the utility’s proffered modeling and analysis about GHG impacts.132 A similar phenomenon is playing out in PSCs’ calls for investigations to achieve states’ net-zero goals — the onus is on the utility to provide the information and the solutions.133
PSCs should take greater advantage of states’ existing environmental resources. For example, every state has its own environmental expert agency, and states could require approval or joint decisionmaking between the two agencies. Reallocation of that expertise from environmental agencies to in-house PSCs could eliminate potential stakeholder and institutional bias. Some states, such as Connecticut, already involve multiple agencies in the process of approving a new power plant, aiming to incorporate a neutral decisionmaker.134
Another option is for states to prioritize renewable energy backgrounds when appointing PSC commissioners. The professional backgrounds of agency leaders and staff influence an institution’s goals.135 Moreover, a single commissioner’s vote has the potential to sway the institutional direction of the agency because only a handful of commissioners comprise PSCs.136 Presently, many state laws provide little to no guidance about the selection process of a state’s PSC commissioner.137 Yet there is precedent for incorporating more substantive qualifications,138 and so a hypothetical law could require at least one PSC commissioner to be selected with regard to their qualifications and experience in climate science and/or renewable energy. Although not sufficient on its own, bringing in climate-related expertise will better en-able PSCs to consider the long-term costs of climate change.
(c) Support from External Allies Within the Government. — Finally, to succeed in their new mandates, state PSCs will require the support and encouragement of all three branches of state government. External support is a key factor in the survivability of an agency’s new goals.139 The state’s executive and legislature should provide direction through executive orders and statutes, while the state’s judiciary plays backstop, reinforcing the agency’s climate-friendly decisions. Thus, litigation and advocacy will continue to play an important role to hold the agencies accountable to their new climate mandates.
2. The Short-Term Solution: Clean Energy Standards. — A century’s worth of unlearning is possible and necessary, but it is not going to happen overnight. Due to decades of decisionmaking without consideration of climate impacts, changes to electric infrastructure are long overdue. Clean energy standards provide a straightforward, workable, and enforceable short-term solution. These standards require state utilities to distribute or generate a percentage of their energy from renewable sources by a certain date. Although blunt policy tools, clean energy standards serve as a springboard for the modernization of the U.S. electricity grid as well as a shift in state PSC institutional norms.
Increasingly more states are implementing clean energy standards at increasingly higher percentages. Today, twenty states, D.C., and Puerto Rico have 100% clean electricity targets,140 with other states currently considering similar 100% legislation.141 These state clean energy standards range in type and target. The goal years range from 2030 through 2070, and the metrics vary between renewable energy and carbon free (which could include fossil fuels in combination with carbon sequestration).142 The standards can be mandatory or purely aspirational, with most being authorized either through legislation or executive order.143 Arizona presented a unique situation, where its own PSC initiated a rulemaking to impose a 100% carbon-free standard by 2070.144 After years of negotiation and work on the rule, the Arizona Corporation Commission ultimately voted against its final rule 3–2 along partisan lines, leaving the state without a 100% clean energy standard.145
One of the greatest criticisms of state legislatures implementing clean energy standards is that they are blunt policy tools that fail to incorporate agency expertise and provide little flexibility to adapt to changing technologies and future circumstances.146 After all, it is not the most cost-effective carbon-reduction policy.147
Although imperfect, a clean energy standard appears to be a politically palatable,148 effective,149 and impactful start. This past year, in direct response to the Governor’s Executive Order, the Wisconsin PSC initiated a docket to investigate how it will achieve 100% renewable energy.150 This is, of course, the same PSC that rejected authority to consider GHG emissions in its order in 2020,151 and voluntarily cut any mention of climate change from its PSC website in 2017.152 As a result of these renewable energy mandates, state PSCs and the utility companies they regulate across the country have been forced to put forward resource plans that prove to state legislators how they will achieve net-zero carbon energy by a set date, regardless of any traditional economic balancing.153
Moreover, clean energy standards check all the boxes for kickstarting a shift in agency culture. The standards provide explicit directives, laying out a numerical target by a specific date. The standards also are feasible with the given tools — PSC commissioners do not require climate expertise or additional resources to simply make 100% renewable energy decisions. And finally, the standards are supported by other branches of government, namely, the ones enacting the standards.
In a sense, clean energy standards are legislative overrides on PSCs’ vetoes over the future of the energy grid. Although this could be cause for concern, tipping points in environmental regulatory history have produced equally blunt and idealistic mandates but resulted in periods of incredible technological innovation. Progress to date proves that renewable energy innovations are around the corner and within grasp. As the climate continues to warm and PSCs continue to ignore the problem, today is one of those tipping points.
Conclusion
The climate is changing and so must our energy regulators. For decades, state PSCs have made decisions about our electricity grid without consideration of the climate impacts. Today, we are suffering the consequences, yet state PSCs continue to deny regulatory responsibility for solving the problem they helped exacerbate. In the long run, policy reform must aim to shift state PSCs’ institutional cultures through explicit climate-related directives and workable objectives, with encouragement from all three branches of government. But in the short term, state legislatures and governors should institute clean energy standards to redirect the trajectory of century-old agencies towards modern-day climate goals.