Opening the electric grid to competition and innovation can help lower costs, address the climate crisis, and power America's energy future all at the same time.

America’s electric grid runs on a 130-year-old business model, and today, families are paying the price. Americans can choose their phone carrier and internet provider, but most have little to no choice when it comes to electricity. They pay their utility bills set by a company that faces no competition, and often holds a government-granted monopoly. Over the last fifteen years, while the costs of solar electricity and battery storage have fallen by nearly 90 percent, Americans have only seen their bills soar. In most states, franchise laws make it illegal for competition to offer cheaper, faster, cleaner alternatives. 

Thirty years ago, the Telecommunications Act of 1996, while imperfect, opened phone markets to competition, and within just a matter of years the cost of calling family the next state over fell to nothing. Now it's time to do the same for electricity and tear down the legal walls that trap billions in savings for American families and businesses. 

The next President should open the energy grid to competition – lowering costs for consumers, cutting power delivery timelines from years to months, creating high-quality jobs, requiring data centers to bring their own power, and allowing innovators to deliver cheaper, cleaner power to all Americans.

The Problem

Americans know we have an energy problem: 

• Residential electricity prices have risen 33 percent since 2019, and in 2025 investor-owned utilities requested $18 billion in rate increases, the most since the mid-1980s. 
• Across the country, demand from data centers, factories, and electrification is surging. And supply is failing to keep up. 
• Solar, wind, and batteries make up more than 90 percent of new capacity, but projects often wait in line for five to ten years just to plug in. 
• Companies are told to build their own power, but then are blocked by laws that make competition illegal–the same laws that utilities pay lobbyists to preserve with money collected from their own customers.

In most of the country, one company holds a government-granted monopoly over the wires, the meter, and the power itself. The household on the other end has no alternative and no leverage. This status quo is the result of a bargain struck more than a century ago. In the early 1900s, as competing utilities were stringing wires down the same streets, states responded by granting utilities the right to serve exclusive territories and earn a regulated return on approved investments. In exchange, utilities were required to accept price regulation and a responsibility to serve everyone. For a time, when electricity required enormous centralized power plants and networks of poles and wires, that bargain worked. But as our energy needs and technology evolved, the bargain did not. 

In other industries, companies make more money by serving customers better or more efficiently. Many regulated utilities, on the other hand, can increase earnings simply by building more. As a result, utilities are rewarded for building more, not building smarter.

In the 1990s and early 2000s, federal reforms opened much of the wholesale electricity system to competition, while a group of states went further by separating local utilities from their generation assets, and allowing customers to choose their retail supplier. But after the California electricity crisis, restructuring of energy markets largely stalled. The result today is a patchwork system across the country with varying competitive access for a generator, the utility, and the customer.

It is time to finish the job and create a truly competitive power market. It is time to Open the Grid.

The Solution

The next President should enact a comprehensive utility market reform agenda that opens America’s electricity system to competition – lowering costs for consumers and businesses, incentivizing a more efficient grid, and accelerating economic growth with the cheapest, cleanest power in history. The new system should preserve what the old bargain sometimes got right—universal service, reliability, safety, and consumer protection—while removing the legal barriers that protect incumbent suppliers' monopolies.

1. Open the Grid to Competition to Boost Supply and Lower Costs

The Open Grid plan introduces competition at the generation and retail level: (1) power plants competing on a level playing field to sell electricity, (2) new plants getting connected to the grid quickly, (3) customers choosing who they buy from, and (4) people having the right to generate their own power.

The next President, working with Congress, should amend the Federal Power Act to require every transmission-owning utility to participate in an RTO or ISO; direct FERC to establish a nationwide, non-firm “connect-and-manage” right to interconnection; and extend open-access requirements from the transmission grid to local distribution networks and retail electricity sales. The agenda should also preempt state franchise laws that prohibit competitive suppliers, customer self-generation, or qualified microgrids from serving customers, while at the same time retain state authority over safety, siting, consumer protection, and local wires rates.

First, Congress should require every transmission-owning utility to join or form a Regional Transmission Organization (RTO) or Independent System Operator (ISO) within five years. RTOs and ISOs bring wholesale competition to regions dominated by vertically integrated utilities. Here’s how it works: throughout the day, power plants, batteries, and aggregators of customers can all submit bids, with the operator calling on the cheapest ones first until there's enough power to meet demand. The cheapest option wins. With vertically integrated utilities, where one company owns both the power plants and the wires, the cheapest option may never even get the chance to compete. Families and businesses living in states without this model in place pay for it: a 2020 report projected that competition could reduce retail electricity costs by nearly 30 percent by 2040 and create more than 285,000 new jobs in the Southeast region alone.

Second, competition in the electricity market only works if new supply can enter quickly. Today, it can take longer to connect a power plant to the grid than it does to actually build the plant itself. Developers can wait for impact studies and deal with uncertain bills for grid upgrades for years before they sell any electricity. An Open Grid offers a different approach, known as “connect and manage.” Instead of waiting for those grid upgrades, a new power plant can connect as soon as a narrower review shows it can operate safely and reliably. Think of it as building a “driveway” needed to connect the power, while the region decides separately where to expand the transmission “highway.” If the lines are congested, the plant can be curtailed, meaning it has to throttle down and lose any sales it may have made. The plant takes the risk rather than forcing customers to pay for it. 

This interconnection process is a big reason why Texas has the fastest-growing grid and produces more renewable power than any other state in the country. New suppliers can enter the market and deliver electricity right away. In fact, while Texas customers used 30 percent more electricity last year than in 2021, new supply came online fast enough to reduce wholesale power costs by 42 percent. Developers plan to build 40 percent of the nation's new utility-scale solar in Texas this year, compared with 6 percent in California. 

Third, customers should get to choose who sells them electricity. To make that possible, we should open retail electricity sales to competition nationwide. The utility that owns the local wires would no longer have an exclusive right to sell customers their electricity. Utilities would keep maintaining and upgrading their poles and wires, restoring service after storms, and connecting customers and power sources on equal terms under rules set by regulators. But with retail competition, retail suppliers would buy competitive generation and sell directly to residential and commercial customers. 

Today, most Americans are captive buyers at whatever price their local utility gets regulators to approve. In a system with choice, suppliers would compete for customers. Customers who want long-term certainty could lock in a fixed price, while others could choose renewable energy, or packages combining electricity with rooftop solar, batteries, and electric vehicle charging. Since retail suppliers pay less for power at certain times of day, they could also compete by rewarding customers for running their appliances or charging their cars when power is cheapest. In Texas, competitive residential rates run below the national average, and commercial customers nationwide in competitive markets have often saved by contracting with retail energy suppliers rather than staying on the utility default rate. 

Competitive retail energy markets have also largely driven product innovation for customers. In Europe, companies provide long-term fixed or variable wholesale price options directly to the customer, combined with EV charging or other ways to shift use to cheaper hours. After Japan opened its power markets, new entrants jumped to provide bundled power, mobile, broadband, and home security. And here in the US, greater access to rooftop solar, community solar, and incentives for battery storage are largely found in competitive markets. In Texas, Base Power provides retail customers with home batteries that provide backup power, and in New York, David Energy bundles retail electricity with plug-in batteries to lower costs. These companies use modern software, price signals, and devices on the customer's side of the meter to deliver innovation and savings. 

Finally, we should allow customers to produce their own energy, and establish a national right to generate power and a viable path to share it with neighbors. Today state franchise laws often prohibit these types of arrangements because the incumbent utility holds the exclusive right to sell electricity in its territory. Under our vision, a factory with onsite generation or battery storage could serve a nearby warehouse, and a neighborhood could pool solar, storage, and flexible demand into a shared local microgrid. A federal safe harbor would allow these systems to operate across public rights-of-way and serve willing customers, as long as they meet safety and reliability standards. Customers that remain connected to the broader grid would continue to pay their fair share for the capacity and backup service from the utility.

2. Fix the Incentives: Pay Utilities for Results, Not Capital

Introducing competition into generation and consumer choice still requires the utility owns and manages the network that delivers power. The current model, referred to as “cost-of-service” regulation, allows utilities to earn a return on new infrastructure they add to their books, which rewards building over finding a cheaper way to deliver reliable power, including by making better use of what utilities have already built. We can change that by replacing cost-of-service regulation with performance-based regulation, which instead links returns to actual outcomes, including reliability, interconnection speed, customer satisfaction, how fully the utilities use what they built, emissions reductions, and cost efficiency. 

We have seen what the current model gives us. Consider the massive multi-billion dollar buildout of smart meters that utilities across the country invested in and received a return on. A review of 17.4 million smart meters found that nearly 90 percent had real-time data capability for customers, yet utilities had turned on that functionality for fewer than 3 percent. That data could enable prices that change by the hour and help consumers manage their energy use more efficiently to lower their costs. But utilities lock it in formats that are hard to access, deliver it weeks late on monthly bills, and resist sharing it with third parties who could build products to help customers save money. 

Under performance-based regulation, a utility’s earnings would be tied to whether customers benefit and generate savings from the infrastructure they paid for – not simply whether the utility successfully installed it. Britain, Alberta, Canada, and others already use a form of these incentives. In these places, regulators cap what utilities can charge, indexed to inflation, and allow the utility to keep any savings. In other words, cut off the blank check and reward utilities for keeping costs down. 

More sensible policy design can yield results: in 2014, Con Edison expected demand in parts of Brooklyn and Queens to outgrow its equipment, and planned roughly $1 billion in new substations to keep up. Rather than simply approving the proposed plan, regulators let the utility earn its usual return on a far cheaper plan that would normally earn it nothing: about $200 million to instead pay customers to cut back at peak times, upgrade efficiency, and install batteries, plus a bonus if it met certain performance incentives.

3. Ban Utilities from Using Your Bill to Fund Their Political Spending

Utilities routinely recover the costs of their political spending through the rates their customers pay. The result: captive customers are funding the lobbying that protects the very monopoly that is extracting value from them. 

Today, ratepayer bills can cover the salaries of employees who lobby against policies the utilities oppose, advertising campaigns to burnish the company’s image, and dues to trade associations that lobby on the industry’s behalf. In Ohio, in what was the biggest corruption scandal in state history, the utility FirstEnergy admitted to paying $60 million in bribes to lawmakers and regulators to secure a billion-dollar bailout for its aging coal and nuclear plants, paid for through surcharges on customer bills. In 2022, California regulators fined SoCalGas $10 million for using customer money to lobby against federal energy efficiency standards. In 2018, an investigation found that contractors working for the utility Entergy paid actors to pose as concerned local residents at New Orleans City Council hearings in support of a proposed gas-fired power plant, including $60 to wear supportive t-shirts and $200 to deliver prewritten speeches.

The next administration can close the loopholes that let utilities use customer funds to lobby policymakers, fund public relations campaigns, support trade associations engaged in political activity, or influence elections. Fortunately, it can do much of this without Congress. FERC can amend its Uniform System of Accounts to prohibit utilities from classifying political advocacy and trade association dues as recoverable operating costs, making it harder for them to pass those costs on to their ratepayers. States like Colorado, Connecticut, and Maine have shown this is possible by passing the first comprehensive bans in 2023, with California following in 2025.

No American believes their own electric bill should pay for lobbyists working to raise their rates. Requiring that political spending come out of utility shareholders’ pockets, and not customer bills, removes one of the most powerful barriers to every other reform on this agenda. 

4. Protect Consumers and Ensure Universal Service

The goal of these reforms is not to just deregulate electricity; rather, it is to move regulation upstream. The government sets standards for safety, reliability, universal access, consumer protection, and cost, and competition determines how electricity is produced, delivered, financed, optimized, and sold. Opening the market must include safeguards to ensure everyone benefits:

• Federal reliability standards. Texas’s 2021 winter storm, which left millions without power and killed more than 200 people, demonstrated the deadly consequences of open competition without strict reliability requirements. Vertically integrated utilities, too, have had problems: during a December 2022 winter storm, Duke Energy ordered rolling blackouts. Congress should establish strong standards for reliability, including winterization and extreme-weather preparedness, clear requirements that there always be enough power available to meet peak demand, penalties for power plants that are paid to be available but aren’t, and a rule that prioritizes critical loads like hospitals, schools, and grocery stores over data centers in the case of emergencies. RTOs can determine the most efficient mechanisms for meeting those standards. 
• Protections for customers who switch. Customer choice should come with clear, comparable pricing; easy switching; and enforceable protections against deceptive contracts, hidden fees, and teaser rates that automatically reset to higher prices. Suppliers should maintain adequate hedging and financial reserves to honor their commitments, and if a supplier fails, customers must be automatically transferred to a backstop provider. Access to bill assistance, payment plans, and protections against disconnection should follow the customer regardless of supplier. Competition should reward better prices, products, and services. 
• Low-income protections. Low-income energy assistance programs like LIHEAP should be protected, expanded, and modernized to reach the households burdened by high energy costs. These programs are chronically underfunded and today reach about 18 percent of eligible households, and just about 5 percent in states like California and Texas. Barriers to enrollment and rigid income thresholds means desperately-needed assistance often misses the families paying the largest share of their income for power. 
• Competition everywhere. These reforms should draw private capital into places that are often passed over as not lucrative enough for distributed energy businesses. Our reforms should drive competition in every zip code, and that means strengthening entities like rural cooperatives, municipal utilities, and tribal utilities.
• A transition glide path. Utilities should be able to recover the costs for smart investments they have already made. Following New York, Connecticut, and Massachusetts’ approach in the late 1990s and early 2000s, which saw vertically integrated utilities divest their generation assets and become wires-only transmission and distribution companies, we should provide a multi-year transition period that lets utilities recover stranded costs over a defined period while opening generation to competition. 

Conclusion

Decades ago, Washington ended the telephone monopoly and opened up the market for competition. Within a generation, prices fell as carriers competed, and today “long distance” calls cost no more than calling next door. Electricity is one of the last of the great regulated monopolies, and we are paying for it with both skyrocketing energy bills and years of delay to bring new power online. A company that earns a return on everything it builds will always find something else to build. What stands between families and businesses saving on their power bill is not a shortage of panels, batteries, or power plants; it is a set of more than century-old franchise laws that make competition illegal, and an industry spending our money to defend them. By breaking the utility monopoly and opening the grid, we unlock cheap, clean power for Americans and power an American economy that works for us all.

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