NCPA - National Center for Policy Analysis

Floundering Around On Electricity Deregulation

July 13, 1999

Proponents of electric power deregulation charge that the process has become mired in distractions such as who will pay for "stranded costs." Meanwhile, restructuring legislation has tried to encourage competition in the generation of electricity while forcing traditional utilities to become common carriers of electricity produced by competing generation companies.

While bringing new players into the generation side of the business will increase capacity, leaving transmission and distribution under tight regulatory control will only perpetuate brownouts, blackouts and shortages. Curtailments in one part of the country can now affect electricity consumers in states and cities hundreds, even thousands, of miles away.

  • To date, only 20 state legislatures have enacted laws restructuring the energy industry.
  • But only five states have actually begun deregulating.
  • Moreover, none of those plans have been in place for more than 18 months.

Critics charge that new regulations which took effect last year have turned local generating problems into regional ones. The regulations allow the owner of an overloaded line to force curtailment of third-party transactions all over the system.

Source: Peter Van Doren (Regulation magazine), "Utilities; Still in the Dark," Wall Street Journal, July 13, 1999.


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