As U.S. policy makers and utility stakeholders prepare for the utility of the future, comparisons are often made to the transformation of the telecommunications industry due to wireless technologies. However, a new report by A.J. Goulding, President of LEI, indicates that the near-death and subsequent rejuvenation of the U.S. rail system over nearly two centuries also offers lessons for the power sector as it adapts its strategies and regulatory philosophies while planning for the utility of the future.

As customers who previously had no options other than to pay set utility rates leave the grid, the cost of distributed generation will become the effective cap on rates for many customers, just as the cost of truck transport became the effective cap on rail shipping rates. Even though distributed generation cannot yet attain the level of grid reliability without significant – and expensive – redundancy, some customers might accept lower levels of reliability. Utility executives can reduce rates to retain customers or reinvent their utilities as microgrid operators coordinating distributed resources.

See full report here.