This IDC Energy Insights Perspective provides an overview of the challenge that the regulated utility industry model presents for the cloud computing model. The opportunity for cloud must be looked at differently in the utility industry. The ability for utilities to receive a guaranteed cost recovery on capital investments creates an apparent disincentive for utilities to invest in cloud software. This Perspective talks about what this means for utilities, vendors, and regulators. IDC Energy Insights believes that the industry — regulators, shareholders, stakeholders, and ratepayers — needs to take a closer look at the true economic impact of the traditional capital expenditure (capex)/operating expenditure (opex) model. We believe that a closer inspection will show that the numbers, in fact, do not make sense for all parties involved.