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This article argues that the twenty-first century challenge to the electric industry is different in kind from previous challenges. Further, past responses to past challenges are inadequate to meet the convergence of demands posed on investor owned electric utilities by new technologies, new markets, and new regulations. Instead, the twenty-first century challenge requires a dramatic new response as electric utilities face a new economic order and as they seek revenue protection and assurances of financial stability from their regulators.

This article will first explore current industry characteristics and challenges in Part II. Part III will then discuss the current situation of the electricity market and investor owned electric utilities' participation in that market. Part IV will analyze the fundamental legal claim available to utilities that the regulatory environment is devaluing their property and may constitute a constitutional taking.

In Part V, a test case involving solar distributed generation and net metering will be presented to examine the types of challenges facing investor owned electric utilities as well as available responses to those challenges. Starting with Part VI, the article more broadly discusses the need to change the current regulatory compact between utilities and their regulators. Then, Part VII examines new forms of ratemaking that can be employed to implement the regulatory compact. The article concludes in Part VIII with a discussion of the shape that the utility of the future ought to take.