Below is a discussion with Travis Fisher of the CATO Institute and energy sector veteran Glen Lyons about their advocacy for Consumer Regulated Energy (CRE).
Maverick: Please give a short intro to our readers about your background(s).
Travis: I am currently the director of energy and environmental policy studies at the Cato Institute. I have nearly 20 years of experience in energy policy, including leadership roles at the Federal Energy Regulatory Commission, Institute for Energy Research, Department of Energy, Electricity Consumers Resource Council, and The Heritage Foundation.
Glen: I have 40 years of energy experience. I retired from Exxon Mobil Corporation in 2022 after working in many parts of the corporation before concluding as the leader of U.S. electricity policy and regulatory advocacy. I also proudly served as a member of the ERCOT Board of Directors for three years.
Travis: We are a two-man team and we’re free market champions focusing on the electricity sector. We’re frustrated that, for all the talk of markets in the electricity sector, deregulation has simply been different regulation—we are working to bring truly free markets to electricity.
Maverick: Explain CRE and why you believe it’s an important and necessary policy proposal that should be prioritized?
Travis: The electricity sector is facing a collision between crushing demand growth on the one hand, which could reach unprecedented levels, and increasing costs and grid fragility on the other hand. New customers are already experiencing long delays in getting a grid connection or simply being turned away. And it’s happening in a heavily regulated sector that isn’t capable of speed or rapid innovation. This presents us with a big challenge, and we need big out-of-the-box ideas. We need electricity supplies that are faster to market, more innovative, and don’t add to the cost or reliability burden that the grids are already facing.
Glen: We call our proposal “Consumer Regulated Electricity” or CRE. CRE is a novel electricity market structure enabled by state-level reforms that would allow anyone to create a new electric utility if it’s not physically connected to the regulated grid. CRE would create a new type of electric utility that would focus on serving new load growth, could design their new utilities from a clean sheet of paper (according to the needs of the customer), move much faster than the existing sector, and would be much more innovative than existing utilities. By being islanded, that is, not connected to any regulated grid, these new utilities wouldn’t impose new costs or reliability concerns on the existing grids. The separation of CRE utilities from existing grids combined with the sophisticated nature of large CRE customers means there wouldn’t be a need for PUC oversight, and that would enable even greater speed and rapid innovation.
Travis: CRE is completely unique among electricity policy proposals. Most other proposals are about favoring certain technologies or changing the rules that existing wholesale markets and utilities follow. The government’s track record on picking winners and losers isn’t so good. Proposals to make small tweaks to existing markets rely on assumptions that some experts are smart enough to know just the right secret sauce that will unleash all sorts of benefits. Each rule change is the product of expert design rather than market testing and an open-ended market process, so the expert-first approach is likely to lead to unintended consequences. CRE— in comparison— is about creating a free market space within electricity where innovations can be tested, something that the sector hasn’t seen in a century.
Maverick: I’m assuming you have limited time and resources like most organizations. Have you focused efforts on particular states/regions?
Travis: Our organization, Advocates for Consumer Regulated Electricity, is simply Glen working out of his house and while I pitch in when my day job at Cato allows. There is no money behind it. We are pursuing CRE because we think it’s the best way to accelerate development of new electricity supplies and unlock the rapid innovation that we have been denied for decades. We also see the immense opportunity for new industries to develop in the United States if we can just find a way to supply the electricity to power it.
Glen: We are focusing on Texas for a variety of reasons. First and most importantly, I live in Texas, know it the best, and have a big network here. Texas also has a history of being open to innovations in energy and being business friendly. Those are the right qualities for a state to consider legalizing CRE.
We believe CRE has potential in any state whose utilities would turn away large new customers by either discriminating against them (the AEP Ohio tariff comes to mind) or claiming that any new demand will take several years if not a decade to accommodate. Those negative attributes—delay, unnecessary cost, regulatory burden—are relics of a slow industry that is unresponsive to customer needs, and we don’t think large customers will tolerate them in an era of fast growth. In other words, if working with a potential electricity supplier feels like a trip to the DMV, you might need CRE.
If you had to bet on a state(s) implementing CRE quickest, who would they be?
Travis: I don’t like making predictions! The open-endedness of CRE is an interesting element—it can be implemented anywhere, and the configurations could be any type of electricity supply arrangement under the sun (as long as the CRE utility maintains complete separation from existing grids). A big selling point for CRE is that as far as taxpayers and ratepayers are concerned, if successful it becomes a ZERO cost state economic development program because businesses that value faster access to new electricity supplies will be drawn to it.
Glen: My time, money, and energy are betting on Texas, but we are happy to meet with interested parties in any state!
Maverick: If you had to steel-man your opponents and potential opponents, what is the best argument against CRE?
Travis: These aren’t from opponents, per se, but people who are skeptical about the need for reform. One question is, “Can’t people do this now?”
The short answer is yes, if you’re willing to own and operate every aspect of the electricity production and consumption infrastructure under the same legal entity. Some people hear “self-supply” and think of the Public Utility Regulatory Policies Act (PURPA), which is a 1978 law that allows large consumers to take advantage of grid-connected, behind-the-meter generation from qualifying facilities (typically combined heat and power facilities whose rates for selling excess power are set by state regulators). But that’s not what we’re talking about here. CRE's goal is to allow people to build new electricity supplies and sell the electricity to others without asking for permission from the local utility or the state regulator.
Glen: And people familiar with the electric cooperative model often ask, “Why not just start a co-op?” Although we appreciate the co-op model, there are a handful of reasons why we think CRE would be better for large, fast-growing customers.
The co-op model still puts customers on the hook for owning power generation. CRE is a much simpler transaction—the seller sells and the buyer buys under a contract that makes sense to both parties. Co-ops involve many owners and complex stakeholder processes (boards of directors, etc.). Also, co-ops are typically created in remote areas where for-profit entities don’t see enough profit opportunity, whereas there seems to be plenty of profit opportunity in supplying multiple large data centers.
The best argument against CRE is that it will be too expensive or unreliable to attract customers. Our response to that argument is that we should legalize CRE and find out!
Maverick: Who are these skeptics most likely to be and why are they wrong?
Travis: The only way to know who is right is to test it in the market. If it fails, what’s the worst-case scenario for a state? Nothing. They created a new piece of legislation but spent no tax dollars and stranded no one with unnecessary investments. If it succeeds, though, a state gets a free economic development program, an actual market test bed for innovations that could be introduced into the regulated sector, and more efficient regulated utilities as a result of their competing with CRE utilities for new large customers.
Glen: The real opponents—which we have not heard from yet—are likely to be the regulated utilities. They might oppose CRE because it’s a threat to their government-granted monopoly privilege. We suspect they will argue that their opposition is because CRE utilities are unsafe, have an unfair economic advantage, or will trigger a “utility death spiral” of grid defection. Since CRE utilities will be islanded, the danger argument is a red herring as they can’t harm the regulated grids. And since CRE utilities will have to build everything from scratch, they face a huge economic disadvantage relative to systems that are already up and running. And when it comes to widespread grid defection, lawmakers could easily limit CRE utilities to serving only new customers.
Maverick: You identified this issue as mostly as a state issue because of the nature of grid governance. Is there a possibility the CRE could also be applied at the Federal level on Federal lands in the Mountain West?
Travis: We believe states are the key jurisdictions because they tend to regulate their utilities regardless of whether the utility is operating on private or public land. If a CRE utility crosses state boundaries, then it will fall under federal regulation, of course. And there’s a chance that some federal power marketing administrations might be open to allowing CRE utilities within their service areas. Proposals to create special economic development zones on federal or tribal lands could be worth exploring, too, and we are certainly open to those kinds of ideas!
Maverick: Thanks for your time guys. Where can Second Power readers learn more and follow your work?
Glen: If you want to contact us, please send an email to glenclyons@advocates4cre.org. You can follow myself on LinkedIn.
Travis: I’m pretty active on X and LinkedIn. Anyone interested can follow my work on either.
