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Electricity Restructuring is No License for Central Planning

RTOs will perpetuate regional monopolies and political rate regulation.

Fortnightly Magazine - June 1 2002

the business could be expected to emerge. Other power entrepreneurs will seek out partnerships with other network business. Ownership of stodgy companies will change, new deals will be made, and a dynamic, evolving industry will be fully capable of meeting consumer demands.

The Benefits to Critical Infrastructure, Security, and the Environment

Regulators must understand and care deeply that innovation in the transmission and distribution networks - and their reliability - is as important as other kinds of innovation like generation technology. Market-driven innovation is even more critical in an age in which many in government and business alike are concerned about the care and feeding of critical infrastructure. Yet the ability to make and execute such market strategies depends crucially on owners and operators who directly profit or lose from decisions, not on FERC-managed reliability panels and armor-plated regulators.

Environmentalists should champion grid deregulation also. So-called "green power" does not find its way easily onto a dumb grid like that of today. The quality of such small scale generation varies widely and is often of a voltage and amperage that cannot readily flow "uphill" into the much higher powered mainlines of most utilities. The creative electronic elements that a smart grid would involve would make it much easier to use such decentralized power sources.

Entrepreneurs instead need the chance to pursue overlapping networks and cross-industry infrastructure deals that we can't envision today, regardless of what the "natural monopoly" theorists have been telling us. The simple fact is that inefficiencies created by a deliberate government policy of central-planning the national electricity grid will outweigh any potential but unlikely abuses by the private owners of transmission and distribution. At the very least, those can be dealt with without a policy of nationwide forced access.

It ought to be an axiom: competitive pressures to bypass incumbent businesses with entirely new infrastructure must always be maintained in free markets, and that means steering clear of any regulated forced access regime.

 

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