Power Jolt Required: Measuring the Impact of Electricity Deregulation

This Alert sets out to measure the price and supply impacts of deregulation in the leading reform jurisdictions around the world.

Participants in electricity markets appear to be despondent. The public opinion fallout from the failed California market opening and corporate malfeasance at Enron has caused even industry insiders to believe that market-based policies may not work as expected.

For example, MacDonald writes that Although the jury is out on deregulation - whether in purgatory or another unpleasant place where the song never ends - it is clear that in most jurisdictions the process has not delivered significant benefits to the residential consumer.

Trebilcock and Hrab also recently repeat a Borenstein and Bushnell quote that shortrun benefits (of deregulation) are likely to be small or non-existent, and the long-run benefits, while compelling and supported in theory, may be very difficult to document in practice.

These pessimistic notes are out of keeping with the significant deregulation benefits that have accrued over the past several decades in telecommunications, natural gas transmission, and air, rail, and truck transportation, not to mention the worldwide successes achieved through privatization and alternative delivery.

This Alert sets out to measure the price and supply impacts of deregulation in the leading reform jurisdictions around the world.