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You’re reading Dispatch Energy, a weekly newsletter on energy and climate policy featuring Alex Trembath, Philip Rossetti, Lynne Kiesling, Rory Johnston, and Roger Pielke Jr. To access more Dispatch reporting and analysis, become a member today.
Welcome to Dispatch Energy! My previous newsletter told the story of a thorny coordination problem. Thomas Edison’s great achievement was not the light bulb but the system around it—generation, wires, meters, financing, and service—bound together because each piece was nearly worthless without the others. That tight coupling, paired with expensive, long-lived assets, made market coordination costly, so the industry coordinated through hierarchy instead. The vertically integrated, regulated utility was in part a Coasean response to an Edisonian machine.
After restructuring in the 1990s separated generation from wires in some states, separate firms provided generation while utilities continued to own and operate transmission and distribution. That change demonstrated that integration was not inevitable while teaching a second lesson: Unbundling succeeds only when its supporting institutions are strong. Today’s grid already looks different thanks to digital technology. This newsletter takes up the question left open: Which activities still belong inside the integrated utility, and which can move to markets, contracts, and platforms?
