Electricity Deregulation: Kilowatts for Nothing and Your BTUs for Free |
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| Authors: | STEVEN N ISSER |
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| Institution: | Steve N. Isser is an Associate at Ballard, Spahr, Ingersoll, and Andrews, a leading national law firm in Washington, D.C. He works on energy, electricity, and related regulatory matters. He is a graduate of the University of Pennsylvania and has a Ph.D. in economics and a J.D. from the University of Texas. He has extensive energy and regulatory experience in the United States and in the former Soviet Union. He has published several books and articles on regulation. |
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| Abstract: | Historically, the electric power industry has been viewed as a natural monopoly that could best be managed through governmental regulation. This article traces the evolution of deregulation in the electric power industry and the intellectual, political, and economic trends and forces that modified this traditional view. It concludes that, despite policy change, retail competition of electricity remains a difficult concept to implement in part because electricity is basically a commodity. Customers must be provided with sufficient incentives to shop between electricity providers and there must be supply incentives for more efficient production. Competition also requires technological advances such as affordable “smart” meters that make it possible for customers to specify tradeoffs between price and consumption, even to the extent of programming apliances to turn on or off in response to price signals. Mature wholesale markets and open access to transmission and distribution are also neede. |
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