Who Shapes Markets? Regulators or Litigants?

Fortnightly Magazine - February 1 1998
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NO ONE LIKES TO BE TOLD THAT HE OR SHE ISN'T CEN-

tral to the job at hand. But that was part of the message that Vinod Dar, managing director of Hagler Bailly's restructuring group, told a gathering of state public utility commissioners.

Take electric utility industry restructuring, for example. At the beginning of the game, Dar said, regulators are important because they create the intellectual structure. They are also important at the end game, to codify rules. In mid-game, however, "the courts control the process by which the market emerges." The new market structure will consist, therefore, of three main players, incumbents, attackers and the court system, he says.

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As for market barriers, Dar said he believes that "freedom and markets find a way, despite barriers. Attackers will file and create legal changes¼ Most successful attackers change the rules of engagement, rather than go head on."

These and other topics, including consumer savings and emissions reductions, dominated the recent Department of Energy and National Association of Regulatory Utility Commissioners National Electricity Forum in Washington, D.C.

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