NCPA - National Center for Policy Analysis

Deregulation Could Prevent Blackouts

August 19, 2003

Various federal and state regulations inhibit energy generation and distribution, say experts, and to prevent future blackouts, industry deregulation is required.

Although electricity generation was ostensibly deregulated in the 1990s, the transmission grid remains highly regulated. Other network industries are spending billions to build redundant networks that guard against cascading failure, but with power generation:

  • Regional utility monopolies prevent competitors from building competing infrastructure.
  • New Source Review, intended for new power plants -- but interpreted by the Environmental Protection Agency to include routine maintenance of existing plants -- is a barrier to projects that would increase "availability and efficiency," according to the Department of Energy's National Coal Council.
  • The Public Utility Holding Company Act prevents utility companies from using profits from regulated activities to cross-subsidize other activities -- thus discouraging interlinking grids, which creates stability, and inhibiting technological improvement of the grid.
  • The Federal Electric Regulatory Commission wants increased central planning by forcing grid managers to carry power from generators to consumers, ultimately destroying the real market choice that the network needs.
  • The Senate will be considering the Lieberman-McCain Climate Stewardship Act, which would put a cap on greenhouse gas emissions -- requiring cost-ineffective alternative technologies.

Source: Fred L. Smith And Iain Murray (Competitive Enterprise Institute), " A Bright Idea: Deregulate," Manager's Journal, Wall Street Journal, August 19, 2003.

For WSJ text,,SB106124490827966500-search,00.html


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