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When Regulations Rule

Government regulation gets a lot of press. Generally as an epithet, as in “overregulation.”

You’ll even find that in the normally mild-mannered Kentucky Living, like on page 10 of the issue you’re holding. President Obama’s June speech about plans to limit carbon dioxide emissions from coal-fired power plants, and the reaction by electric co-op leaders, seem worthy of attention in a magazine published by Kentucky’s electric cooperatives.

Kentucky’s heavy reliance on coal is among the reasons our state has some of the lowest electric rates in the country. Concerns about carbon dioxide’s role in global warming have put pressure on that reliance on coal, and on the affordability and reliability of your electricity.

But even as we watch the progress of the politics of climate change, The Future of Electricity column shows that not all regulations are created equal.

In addition to coal’s role in keeping Kentucky’s electric rates low, credit should also be given to the set of rules keeping an incredibly complex system running so smoothly that most of the time you don’t even think about it.

Those rules govern such basic utility industry building blocks as who can serve what territory, what kind of rates can be charged, and how power gets shipped across the country.

The clearest example of the benefits of regulation comes from the early days of electric co-ops in the 1930s. Although the investor-owned utilities that powered America’s cities had no interest in serving rural communities (that’s why co-ops formed in the first place), they were still suspicious of these new, small, customer-owned utilities. So in some cases, those investor-owned utilities set electric poles right across the road from the co-op poles. Because the only reason for stringing those wires was to harass the local co-op, they became known as “spite lines.”

That sort of nonsense led directly to various “territorial laws” that limited utilities to serving specific geographic areas. That’s government regulation for sure. But imagine as many as twice as many electric lines across this country’s fields, plains, and neighborhoods, for the same number of customers. Then imagine what those extra wires and poles would do to your electric bill.

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