Recent electricity pricing argues for faster, more extensive deregulation.
Sean Casten is the president and CEO of Recycled Energy Development, a developer of waste-heat recovery and cogeneration facilities, based in Westmont, Ill. Contact him at firstname.lastname@example.org.
Was restructuring a success? Prices provide a dispassionate analysis, showing that restructuring was poorly designed, badly executed, and focused on the wrong part of the grid. With those lessons learned, it’s time to explore ways to move forward.
Recent electricity price increases have prompted disparate organizations to issue self-serving declarations about whether deregulation is to blame. The Electric Power Supply Association, representing competitive power suppliers, claims market-oriented reforms have benefited consumers, while the American Public Power Association, representing municipal utilities that want to maintain their control of local markets, argues the opposite.
Fortunately, prices provide a dispassionate analysis. They illustrate that restructuring was poorly designed and badly executed, and it focused on the wrong part of the grid. An analysis of prices also suggests new directions for electricity market regulation (see sidebar, “A Model for Reform”).
Restructuring Started to Work
Some state officials have blamed price spikes on deregulation, giving us a readily testable proposition: Have price increases in restructured states exceeded those in states that chose not to restructure?