Electricity Restructuring: What Has Worked, What Has Not, and What is Next
Jeff Lien, EAG 08-4, April 2008
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Abstract:
In the 1990s and early 2000s, a series of state and federal initiatives restructured electric markets. In
many areas of the country generation was unbundled from transmission and distribution and
competitive markets for energy generation were established. A decade has now passed since many
of these market reforms were implemented, and increasing energy prices have re-focused attention
on these reforms. In particular, commentators are blaming the reforms for the rising energy prices
and, in several states, legislators are now considering re-imposing regulation. In this paper I discuss
some successful features of industry restructuring, and consider areas where further reform may be
warranted. It appears that market restructuring is now producing significant tangible benefits in the
areas of the country where it has been most fully implemented. Calls for the reimposition of
heavy-handed regulation should be resisted.