The current system of regulating electric utilities in the U.S. provides rewards for selling more electricity. Conversely, utilities are penalized for running even the most cost-effective, energy-efficiency programs because these programs reduce sales and, thus, decrease utility earnings and...

In principle, current regulation of investor-owned electric utilities is simple: the more electricity a utility sells, the more money it makes for its stockholders. This link between sales and earnings encourages utilities to sell more electricity, whether or not such increased sales benefit...