A regulatory framework for an evolving electricity sector: Highlights of the MIT utility of the future study

Ignacio J. PéRez-Arriaga, Jesse D. Jenkins, Carlos Batlle

Research output: Contribution to journalArticlepeer-review

62 Scopus citations


The electric power sector is once again evolving. A variety of distributed energy resources and improving computation, communication, and control technologies create an unprecedented degree of choice for electricity consumers, choices that are poorly guided by electricity rates and other incentives designed for a comparatively simpler era. These technologies also create new tools for regulated utilities, competitive suppliers, and other businesses to employ in the provision of electricity services. This paper summarizes the findings of a two-year, multidisciplinary MIT Energy Initiative research effort, the Utility of the Future study, and outlines a framework for proactive electricity regulation, market, and policy reform designed to enable the efficient evolution of the power sector over the next decade and beyond. Recommendations include a comprehensive system of efficient prices and charges for all electricity users, enhanced regulation of distribution utilities, careful reconsideration of industry structure to avoid conflicts of interest, and improvements to electricity markets. Together, this framework is intended to establish a level playing field for the provision and consumption of electricity services and enable the integration of a cost-effective combination of centralized generation, conventional network assets, and emerging distributed resources, whatever that mix may be.

Original languageEnglish (US)
Pages (from-to)71-92
Number of pages22
JournalEconomics of Energy and Environmental Policy
Issue number1
StatePublished - 2017
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Energy (miscellaneous)
  • Management, Monitoring, Policy and Law


  • Distributed Energy Resources
  • Electricity Market Design
  • Electricity Rate Design
  • Network Regulation
  • Regulatory Economics


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