Breaking the Bulk-Power BottlenecksWallace Edward Brand

Fortnightly Magazine - March 15 1995
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By Wallace Edward BrandWallace Edward Brand practices law in his own firm in Washington, DC, where he represents small electric systems. Previously, he worked as a trial attorney at the Federal Power Commission, where he tried the Arkansas Power & Light case that established federal jurisdiction for operations linked to interstate power pools, and at the antitrust division of the Justice Department, where he tried electric utility cases under Atomic Energy Act section 105.

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The debate over "PoolCo" could learn something from antitrust law. The limited analysis of PoolCo that has been presented so far to the California Public Utilities Commission and the trade press ignores accepted methods of antitrust analysis in evaluating impacts on competition. Relevant markets have not been defined. The debate has failed to discuss or analyze the barriers to competition, especially barriers that can be overcome by institutional arrangements.

Competition, of course, presumes two or more sellers of the same product (or reasonable substitutes) vying for the trade of a buyer or buyers. Competition rewards the efficient and innovative; it weeds out the inefficient and restrains the greedy. By "competition" here I refer to fair or constructive competition, not "destructive" or "predatory" competition. The latter eliminates targeted rivals, no matter how efficient or how willing to accept a small profit margin.

As a general matter in our competitive economy, when the price of a product rises, other sellers will enter the market if they can purchase the necessary factors of production and combine them to sell at a profit.

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