In the United States, the modern electric utility industry began to emerge about 100 years ago and would be guided by a philosophy which came to be called the "regulatory compact." Under the compact, state and local governments generally granted utilities the monopoly right to provide electric power in a designated service territory, in exchange for an obligation to serve all electric power customers. Much of the nation's power generation and delivery infrastructure was built and maintained under this arrangement, with customers ultimately paying for the costs of electricity services. State public utility commissions (PUCs) or similar organizations provided oversight of the rates charged for electricity services. PUCs also approved the construction of new power plants and electric power lines, allowing utilities to recover costs of providing service in rates charged to customers. The modern electric utility industry thus emerged and grew in most states as a virtual monopoly, with vertically integrated companies generating electric power, and delivering electricity directly to customers. Large, central station power plants were built employing economies of scale across much of the United States, most often fueled by coal, which was generally an inexpensive, local resource. Large-scale hydropower was developed where it was available as a resource. In areas without access to cheap coal or hydropower, nuclear power later developed as an option for base load power to meet the growing demand for electricity. Natural gas-fired power plants were generally built to meet intermediate and peak load needs. Petroleum saw a brief period of increasing use in the 1970s and 1980s, mostly in dual fuel combustion turbines, but has declined ever since. The vertically integrated, regulated model for the electric power industry remained essentially unchanged across the United States until the latter years of the last century. The Public Utility Regulatory Policies Act of 1978 (PURPA) ( P.L. 95-617 ) was arguably the law that ended the near utility monopoly on electric power. Among other goals, PURPA was designed to conserve supplies of natural gas (considered threatened at the time), encouraging fuel efficient cogeneration and alternative fuels and methods to generate electricity. PURPA required electric utilities to purchase power from these new power generators, essentially allowing a competitive provider into a utility's formerly exclusive service territory. The efficiency of combustion turbines used for generating electricity accelerated as their use in PURPA-qualified cogeneration projects expanded, and this in turn aided in the growth of the nonutility power sector. The power generation sector has a variety of structures and ownership arrangements. Electric utilities have diversified ownership, including publicly owned utilities, investor-owned utilities, electric cooperatives, federal power agencies, and nonutility generators. Competition in the electricity industry was strengthened as federal policy with the passage of the Energy Policy Act of 1992 (EPACT92; P.L. 102-486 ), allowing a new class of nonutility producers to emerge. As is shown in Figure 1 , the nonutility power generation sector is the largest in the United States. In the early years of the last century, electric utility companies quickly realized that they could reduce costs and enhance reliability by interconnecting with one another, thus sharing generation resources. The development of "power pools" allowed member electric utilities to exchange power, or transfer (i.e., "wheel") power to another utility in either wholesale or retail (to an end-use customer) transactions. Power pools can be "loose" or "tight," with the level of independence being the primary differentiator. With FERC Order 2000, the transformation of existing tight power pools was completed with the formal establishment of the Regional Transmission Organizations (RTOs) in several regions of the United States (see Figure 2 ). This led to the rise of wholesale power markets, and enabled industry restructuring in various U.S. states and regions, requiring utilities in some states to move power plants into a competitive function, while retail distribution utilities remained under state regulation. Under this arrangement, utility transmission systems are run by the RTO and are regulated largely under FERC jurisdiction. In some states, retail competition was introduced to give end-use electricity consumers a choice between their incumbent utility supplier and competitive electricity suppliers. Power plants under this new regime were therefore required to compete with each other to sell power to retail distribution companies in markets administered by the RTO. Nowadays, the electric utility model is under further pressure as the sector deals with issues such as the aging of power generation and other assets, the implementation of new environmental regulations leading to different choices in power generation fuels, and the development of technologies providing more and newer options for customers to self-generate electric power. These factors have the potential to cause dramatic changes in how the United States acquires, generates, and uses electricity. Given that the United States seems to be at a turning point in the history of the electric power sector, some have advocated for the electric utility industry model to be reinvented under a "Utility 2.0" paradigm, wherein the projected needs of society for electric power and services become the driving force behind future utility investments. Various states and jurisdictions have begun initiatives to look at what this new "regulatory compact" could specifically encompass. The State of Maryland, for example, has issued a report detailing its "vision of an energy future that is more reliable, cost effective, green, energy efficient, consumer-directed, and technology advanced. Utility 2.0 can make this service quality transformation a reality with major economic, environmental and security benefits to Maryland and all its citizens." Another proposed model for Utility 2.0 in the State of New York would see development of a system capable of accommodating more renewable electricity from smaller solar and wind generation, and depend less on power from larger, central station power plants. The question some stakeholders are asking is whether a formal transition from today's grid to the grid of the future is needed. This report will begin to explore the issues, discussing what forms a transition could take, and suggest questions that Congress may want to address. Electricity is fundamental to the commerce and daily functioning of the U.S. economy. The modern, technological underpinning of manufacturing and services relies largely on digital devices which have increased U.S. productivity and global sales. The way electricity is produced has changed in the last 40 years, along with the regulatory structures and laws governing its production in most of the United States. The following sections will discuss some of the primary factors affecting the U.S. power sector. For many years, the growth in sales of electric power could be directly related to growth in the economy. However, with energy efficiency in homes and appliances increasing, a decoupling of growth in electricity demand from growth in Gross Domestic Product (GDP) is occurring. According to the U.S. Energy Information Administration (EIA), the linkage has been declining over the last 60 years, as U.S. economic growth is outpacing growth in electricity use. The trend is illustrated by Figure 3 , which shows growth in electricity use and growth in GDP over the period. EIA's projections point to a continued decline in electricity use relative to economic growth. While there may be years of relative growth in the future, EIA does not expect a "sustained return to the situation between 1975 and 1995, when the two growth measures were nearly equal in value, or the earlier period in which the growth rate in electricity use far exceeded the rate of economic growth." EIA attributes several factors as drivers to this trend, including "slowing population growth, market saturation of major electricity-using appliances, improving efficiency of several equipment and appliance types in response to standards and technological change, and a shift in the economy toward less energy intensive industry." With growth in demand for electricity having been essentially flat for many years, the need for new power plants has been delayed in many parts of the country. The projections for future demand growth in most regions of the United States are even declining. However, even an annual growth rate of 0.9% can mean an increase in electricity demand of 27% over the next 30 years, and may result in a need for new power plant capacity. With the passage of the Clean Air Act (CAA) amendments in 1970, Congress required the Environmental Protection Agency (EPA) to establish standards to reduce the potential health and environmental impacts of fossil fuel use by limiting emissions by-products or other consequences of combustion processes. These environmental regulatory requirements have been evolving in the last decade due to various legal challenges to the regulatory implementation of federal laws. Much industry attention has focused recently on the pending finalization of some of these regulations, and their potential to contribute to retirement decisions for some coal-burning power plants. In addition to being the largest source of electric power, coal-fired power plants are among the largest sources of air pollution in the United States. Under the CAA, however, they have not necessarily been subject to stringent requirements: Emissions and the required control equipment can vary depending on the location of the plant, when it was constructed, whether it has undergone major modifications, and the specific type of fuel it burns, among other factors. More than half a dozen separate CAA programs could potentially be used to control emissions, which makes compliance strategy potentially complicated for utilities and difficult for regulators. While the new rules have been developed at the federal level, by EPA, they will generally be implemented by state agencies. They include the Cross-State Air Pollution Rule (which replaced the Clean Air Interstate Rule); the Mercury and Air Toxics Standard, or MATS rule; the rule for coal combustion residues; and the Clean Water Act Section 316(b) guidelines for once-through cooling water systems. The MATS rule requires coal-fired power plants larger than 25 megawatts (MW) in capacity to incorporate the maximum achievable control technologies (MACT) by April 2015 needed to reduce the airborne emissions of mercury, acid gases, and toxic metals. However, state environmental permitting agencies are allowed to grant a one-year compliance extension.