Electricity Restructuring: Deregulation or Reregulation?

Posted: 5 Sep 2000

See all articles by Severin Borenstein

Severin Borenstein

University of California, Berkeley - Economic Analysis & Policy Group; National Bureau of Economic Research (NBER)

James Bushnell

University of California - Energy Institute; University of California, Berkeley - Department of Industrial Engineering & Operations Research (IEOR)

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

Borenstein, Severin and Bushnell, James B., Electricity Restructuring: Deregulation or Reregulation?. Available at SSRN: https://ssrn.com/abstract=235865

Severin Borenstein (Contact Author)

University of California, Berkeley - Economic Analysis & Policy Group ( email )

Berkeley, CA 94720
United States
510-642-3689 (Phone)
707-885-2508 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

James B. Bushnell

University of California - Energy Institute ( email )

Berkeley, CA 94720
United States

University of California, Berkeley - Department of Industrial Engineering & Operations Research (IEOR)

IEOR Department
4135 Etcheverry Hall
Berkeley, CA 94720
United States

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