Electricity Restructuring: Deregulation or Reregulation?
Posted: 5 Sep 2000
Abstract
The article discusses the lessons that can be gleaned from experience to date with electricity restructuring. Long-term gains from restructuring are most likely to be the result of more efficient and prudent long-term investments. Although restructuring could have near-term benefits for society, it is at least as likely that restructuring will not yield near-term benefits because of decentralized dispatch and the exercise of market power. The authors argue that there will be a continued need for regulatory oversight in electricity markets because they will remain especially vulnerable to the exercise of market power, even by firms with relatively small market shares, at least until there is much more real-time demand responsiveness. Thus, restructuring in electricity markets is not now, and is unlikely to be, synonymous with deregulation.
JEL Classification: L51, L94
Suggested Citation: Suggested Citation