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Newly available technologies, however, allow greater control of power flows on

the grid and threaten to make monopoly regulation by FERC and state public utility

commissions anachronistic. High-voltage silicon switches, called thyristors, allow

engineers to "guide the flow of megawatts as rapidly and efficiently as integrated circuits

in personal computers handle microwatts."27 They allow the electrical grid to be con-

trolled electronically rather than electromechanically, as is typical today. As Richard

Balzhiser, president emeritus of the Electric Power Research Institute, notes, "Our ability

to switch at the speed of light will allow us to operate much closer to the system's thermal

limits, thus significantly enhancing the system's delivery capability without sacrificing

reliability."28

Mandatory open access is likely to reduce the incentive to adopt new grid control

technologies. If an independent system operator is used to manage power placed on the

grid, no one will profit from improvements in the precision control of power flows. In the

absence of mandatory access, entrepreneurs are more likely to adopt silicon switching

technology to attract customers who need "perfect" transmission reliability.

User-Owned Transmission Grids: Taming the Monopolist

The widespread fear of monopoly behavior by the sellers of transmission services

overlooks the fact that electricity buyers may organize to counter any market power

possessed by sellers. Demsetz argues,

If we are willing to consider the possibility that collusion or merger of all

potential bidding rivals [sellers of power] is a reasonable prospect, then we

must examine the other side of the coin. Why should collusion or merger

of buyers be prohibitively costly? If we allow buyers access to the same

technology of collusion, the market will be characterized by bilateral

negotiations between organized buyers and organized sellers.29

Houston offers compelling arguments about how user ownership could become an

important feature of the grid structure and eliminate harmful market power in transmis-

sion.30 The market solution to transmission monopoly power and the alternative to

regulatory management of the grid is what Houston envisions as the "user-ownership

solution." Houston notes that "ownership of transmission by its heaviest users is perhaps

the most effective means of reducing the possibility of hold-up problems related to these

co-specialized assets. That more measured market response can deter opportunism

because it causes owners to bear losses in their roles as customers."31 Houston argues that

"in the electricity marketplace, absent regulation, transmission's great value relative to

alternatives makes transmission control virtually an imperative to those who are using or

contemplating using the system frequently over a long time frame."32