I can’t find the answer I want with Google or Wikipedia, probably because I don’t know what question to ask. What I want to know is this:
The US Department of Energy has some kind of say in energy regulation. However, when I write my electricity bill every month, it goes to a company with a name that is not DOE, and that I assume is a for-profit company. How do these two entities interact?
And how does it work for other utilities, such as water treatment, waste water, trash collection, and natural gas?
The Department of Energy is a cabinet agency that regulates energy production and research in the US, but it doesn’t actively produce anything…it’s a regulatory agency.
In other words, you write your check for your electric bill to your electric company, which is the one that provides you with the power. The Department of Energy (well, probably the Federal Energy Regulatory Commission, but…) makes sure that that electic company is acting according to federal law, doesn’t gouge you in terms of prices, etc.
I think the states do most of the power price regulation. FERC (the feds) deals with the infrastructure crossing state lines. The DOE also permits nuclear plants, under the NRC. They may also permit other electricity generation contraptions.
Back to the state level, there are a lot of models for regulation, and lots of debate as to which model is best, and if regulation is even desirable at all, etc.
The simplest model of regulation says the power company is allowed to make a fair rate of return (say 6% or whatever) on their fixed costs and pass the variable costs on to the consumer. (This is why they used to say utility stocks were good for widows and orphans, you could count on a steady 6% return)
There are some problems with this, however. The power company doesn’t exactly have too much of an incentive to reduce fixed costs, so efficiency is lost.
Public utility companies (water, wastewater treatment) are usually (but not always) municipal agencies that provide these services. In most cases, these agencies are run differently than other municipal departments in that they are called “enterprise agencies.” They aren’t usually funded out of the general fund budget from your tax dollars, but instead charge hookup fees and fees for usage per gallon (you buy the water when you use it and pay for the disposal when it goes downt the draiin). Depending on the policy in your locality, the municipal government may install the lines, but that’s usually left to the developer, who then gets credit for the hookups on the lines they’ve paid to install. In that way, the municipal government doesn’t install lines that aren’t needed, gets the lines installed by another party, and takes possession for operation and maintenance.
Natural gas can also be run the same way, if your locality has a municipal gas company (the City of Richmond does, for instance). Trash pick up, at least around here, is not a municipal function is in private hands. I assume that it is a part of the public works dept. in other places that do provide it, and it is either paid for out of general funds, or the consumer pays for it on a subscription basis.
Utilities are either government-owned (by the municipality or the city or county or whatever) or they are private companies with some sort of special status. Here in NYC, the only power company is Con Edison, a private corporation which is traded on the NYSE. The state has granted them a monopoly for a certain region, and in exchange for this monopoly, the state gets to regulate electricity prices. The reason for the monopoly is that, when they were first wiring up the city for power, no private company was willing to invest the huge amount of money to build the necessary infrastructure without some guarantee of success in the market. Water, gas, phone and cable companies have similar deals all over the country. Newer technology has made some deregulation possible; for example, small local phone companies can now lease lines built by the baby-bells, and in some places alternative energy companies can enter into agreements with the local monopolies to take over a certain amount of demand from their customers.
One interesting exception to all this is the Tennessee Valley Authority, which is a New Deal corporation owned by the federal government that operates all sorts of dams and hydroelectric generators which provide power to a number of people in that region.
The DoE doesn’t own any power plants, except for some small nuclear reactors used for research. Their primary business is national energy regulation. FERC regulates the national electric grid and sets engineering and market standards for interstate electricity trading. The NRC regulates and licenses nuclear power plants and sets safety standards. A large component of the DoE’s activity is researching nuclear weapons (they have some impressive super-computers for simulating them.) The DoE also has an intelligence arm which analyzes the nuclear abilities of other countries.
A couple of interesting (to me, anyway) points. First, TVA acts like a privately held company in many ways, including being accountable to state and local regulations. They’ve even been involved in lawsuits between EPA and utilities.
Second, a significant part of DOE’s responsibility is for nuclear weapons - their design, construction, and storage, and not just the research and intelligence. When the old Atomic Energy Commission was disbanded, the regulatory side went to the Nuclear Regulatory Commission and the weapons and power production all went to DOE. That’s not something they (DOE) plays up, but it makes up a major part (if not the majority) of their budget.
BTW, I’d say that DOE’s primary business is not energy regulation, but promotion of energy production and use.