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where unrestrained competition has been tried (Kapner and McDonough,
2002), and this is not just a minor adjustment but a huge mistake. The energy
crises during the summer of 2003 in northern United States and southern
Canada along with those in Europe point dramatically to something being
wrong with the deregulation and privatization economic models.
The current energy crisis created a challenge that provides the opportunity
to look at energy economics in a new and different manner. Neoclassical or
conventional economic theory looks at energy from the perspective of the
market, whereas energy economics needs to be examined from the perspective
of the society in general. The object of an energy system or sector should not
be to maximize corporate profits, but to assure that civic interests are protected
for all citizens and best developed for future generations.
In the current predominant deregulation model, the pursuit of profit is
assumed to lead to public good. As evidence mounts, the pursuit of the public
good when it leads to profit only is a disaster for not only the company but also
the general public. This “public good” argument is parallel to Hawkin and
Lovin’s concept of “natural capitalism” rather than to the neoclassical eco-
nomic theory. It is consistent with the findings that socially and environ-
mentally responsible firms are profitable, sometimes more profitable than
average (Angelides, 2003a).
However, this alternative economic framework is only beginning to be
articulated. Although it is not possible to present a complete new theory of
civic capitalism here (Clark and Lund, 2001), this chapter will outline the
basic economic elements of a new approach to electricity structure that sup-
ports the development of an “agile energy system.” “Civic markets” define the
role of government and regulatory oversight that is embedded in publice
private partnerships. This is not a socialist or communist model (Clark and Li,
2004). The public good is not just maximized by central planning and control
or by the elimination of private ownership.
Cooperation between the publiceprivate sectors in the form of partner-
ships, collaborations, rule making, setting codes and standards, and imple-
menting programs is the new civic market model. This approach to economics
and politics is an alternative to the theory that competitive market forces would
increase the public good of any nation state. By letting private monopolies
control the supply (or demand) of any infrastructure sector like energy,
government opens the door for mistakes like the one that happened in the
California energy crisis between 2000 and 2002.
The worldwide energy crisis has reinforced the basic tenet that all gov-
ernments must adhere to higher standards for the public good. Leaving energy,
water, environment, or waste, among other infrastructure sectors, to the
“market” or “competitive forces” of supply and demand was wrong in the first
instance. The predictable results were that private monopolies gained legal
control of energy supply and generation. These market forces only replaced