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Editorial: The power of competition for electricity

Competition for electricity.

Competition for electricity. Credit: Illustration by Felipe Galindo

The Obama administration took a huge step last week in fighting climate change by proposing regulations to reduce carbon pollution from power plants. We now are on the cusp of a years-long process that could transform the nation's electrical industry, improve the air we breathe and reduce the risk of severe storms.

The consequences of the Environmental Protection Agency's new rules are likely to push New York, and particularly Long Island, into the forefront of improving energy efficiency and introducing more market competition to challenge the traditional big-utility business model. This sea change -- in how we produce power, from whom we buy it and how much we pay for it -- may take years, but we could be on our way.

First, the national picture.

The EPA's goal is to reduce power sector carbon emissions 30 percent below 2005 levels nationally by 2030. Power plants are the nation's largest source of carbon emissions. As a result, air pollution is predicted to decrease 20 percent by 2030. Without the reductions, asthma would worsen by about 10 percent on Long Island, according to the White House.

The new rules -- expected to face legal and congressional challenges -- have worldwide benefits as well. The United States' reluctance to act has been the biggest impediment to global action on climate change; now we have a better hand to play at an international climate change meeting in September.

The EPA plan is smart in its flexibility. To reach the national target, the plan sets a carbon reduction goal for each state but lets each figure out how to reach its goal. Besides closing some of the nation's 600 coal-fired power plants, other options include: reducing demand for power, renewable energy, nuclear plants, and a regional cap-and-trade system like the one that includes New York and eight other Northeast and mid-Atlantic states. The Regional Greenhouse Gas Initiative has reduced regional carbon emissions by 40 percent.

In meeting the new rules, New York will have to pursue innovation and efficiency. Gov. Andrew M. Cuomo already has pitched a plan to revolutionize the electric system, and Long Island will be the state's laboratory for a host of reasons -- high rates, aging power plants and infrastructure, a need for resiliency as shown by Sandy, and a grid inadequate to meet demand, especially on the East End.

The state's plan envisions decentralizing electricity production -- replacing huge plants with hundreds of smaller producers, including solar panels, small gas-powered generating stations, wind turbines, batteries and fuel cells. Some might combine to power microgrids that would keep running during blackouts. Existing utilities would coordinate the distribution of power and set prices that are expected to be lower, or at least not rise as fast as they had in the past.

There is a precedent. Remember Ma Bell? Thirty years ago, a copper wire entered your house and you bought telephone service from one company, the same service as your neighbor and at the same price. Now, there are myriad providers offering all types of services, never even imagined, at all types of prices. The state's plan foresees a gaggle of electric industry T-Mobiles vying for your business and offering choices. The utility would no longer own the customer.

Optimistic state officials expect to see some of these changes within five years.

This approach poses questions for Long Island, such as whether to build the proposed Caithness II plant, or something smaller, as a bridge to a day when we have more innovative and efficient ways to deliver electricity.

PSEG Long Island, which operates our local grid, must submit plans for future projects to state regulators by month's end. Expect to hear about ways of reducing demand -- for example, by incentivizing customers to swap an old air conditioner or allowing a utility to stop running your pool filter for an hour at peak demand times in return for a credit on your bill.

The initiatives could bring dramatic results. At best, they could help fight climate change, clean the air and bring us a cheaper electric system.

That's a change in power that can help everyone.