FERC Cannot or Should Not
Jay Morrison is an Energy Bar Association Primer Dean and Vice President of Regulatory Issues at the National Rural Electric Cooperative Association. This screed solely reflects the views of the author and does not necessarily reflect the views of NRECA or any of its members.
In the early nineties, spurred on in part by deregulation in other industries, states began to look seriously at restructuring their retail electric utilities. At its height, in 2001, nearly half of the states had taken steps to move to retail competition.
Following the California energy crisis of 2000-2001, there was some retrenchment. Today, sixteen states have restructured retail markets for electricity, at least to some degree. Even in those states, however, states have largely chosen to permit electric cooperatives and government-owned utilities to continue to provide traditional electric service.
At its heart, the states' decisions whether to restructure was based on policymakers' determination of whether retail competition or traditional vertically integrated utilities regulated by the states or local boards could do a better job of providing electric service to the public.
Those that supported restructuring generally argued that traditional integrated resource planning and regulation was inefficient, imposed too much risk on consumers and provided utilities inadequate incentives for innovation. Competition, they concluded, would drive down costs, shift risk from consumers to investors, and spur innovation.