Without Vertical Integration, Retailers Limited
Steve Mitnick, Editor-in-Chief of Public Utilities Fortnightly, is a very competitive fellow as anyone who knows him will attest. Though paradoxically he very much appreciates regulation of competitive fellows and companies in the public interest.
Each month, here, in this spot, the History Repeats column takes a look back on the large moments in the history of utility regulation and policy. And reflects on the lessons of history for us in the practice of pursuing the public interest in the present and years ahead.
Let us now consider promises that were made a quarter century ago and whether they were kept. In particular, when retail competition was ushered in, replacing regulation in — coincidentally — about a quarter of the states, it was often promised that this change would lower retail customer bills.
There is little or no conclusive evidence that residential customer bills are lower than they would have been in the absence of competition, that is, if regulation would have remained. Or in comparison with customer bill trends in the three quarters or so of the states that didn't implement competition at the retail level.
In assessing the effect that competition has had on residential customer bills, I like to pose this basic question. Why should we have supposed that residential bills would be significantly lower under competition? This question cuts to the heart of the matter, I believe.