Commentaries
"Electricity Deregulation Must Target Demand," by Jerry Taylor and Peter VanDoren, January 2001.

"California Screamin' ... About Electricity Deregulation," by Jerry Taylor and Peter VanDoren, January 2001.

"The Electricity Blame Game," by Richard Gordon, December 2000.

"Just Say 'No' to Managed Competition," by Jerry Taylor, April 1997.

"Deregulation or Managed Competition?" by Jerry Taylor, January 1997.

The California Experiment
Once a political train wreck occurs, you'll never find anybody who confesses to driving the train, but everyone will claim they saw it coming. The Cato Institute, however, has long warned that what was advertised as "deregulation" was anything but, and that lower rates and greater economic efficiencies were unlikely to result. We told you so!

"Stranded in Sacramento: California Tries Legislating Electrical Competition," by Robert Michaels, Regulation 20:2, Spring 1997.

"High Voltage Swindle: Why Electricity Restructuring Will Electrocute Ratepayers," by Jerry Taylor, Cato Commentary, January 1997

What Should Congress Do?
The electricity crisis in California is a challenge not only to state officials but to the federal government as well. Rather than patch-up a failed regulatory experiment, the Cato Handbook for Congress proposes a wide-ranging deregulatory agenda that would radically transform the industry.

Electric Utility Regulation 101
Why did various state legislatures throw out the old electric utility regulatory model and where did it come from anyway? What choices did legislators and regulators face when they undertook the job of reinventing the regulatory regime a few years ago? What are the strengths and weakness of the alternative regulatory models, and what issues are really driving political debate?

"The Deregulation of the Electricity Industry: A Primer," by Peter VanDoren, Policy Analysis no. 320, October 6, 1998.

"Regulatory Reform in the Electric Power Industry," by Vernon Smith, Regulation 19:1, Winter 1996.

"Market Deregulation of the Electric Power Sector," by Benjamin Zycher, Regulation 15:1, Winter 1992.

"A Historical Perspective on Electric Utility Regulation," by R. Richard Geddes, Regulation 15:1, Winter 1992.

"Deregulating Electricity: What Stands in the Way," by Robert Michaels, Regulation 15:1, Winter 1992.

Electricity Deregulation? Not By a Long Shot
Nearly half the states in the Union, most prominently California, have restructured or are in the process of restructuring their electric utility regulations along the same general lines: partial deregulation of wholesale generation with corresponding complex new regulatory regimes to govern transmission and distribution. In brief, electricity "deregulation" has followed the telecommunications model of mandatory open access to the grid under tightly regulated terms and conditions. While the particulars between state experiments may vary, the general model is the same, and that model is a far cry from anything resembling a true free market. Indeed, Cato has long argued that this new regulatory regime was built upon an economic castle of sand.

"Making Sense of Electricity Deregulation," by Peter VanDoren, Regulation 23:3, Summer 2000.

"Electricity Legislation: Ease by Inaction," by Thomas Lenard, Regulation 21:3, Summer 1998.

"Electric Avenues: Why 'Open Access' Can't Compete," by Clyde Wayne Crews, Policy Analysis no. 301, April 13, 1998.

"Electricity Contenders: Coordination and Pricing On An Open Transmission Network," by Arthur De Vany, Regulation 20:2, Spring 1997

"Electric Utility Reform: Shock Therapy or Managed Competition?" by Jerry Taylor, Regulation 19:3, Summer 1996.

"Market Deregulation of the Electric Power Sector," by Benjamin Zycher, Regulation 15:1, Winter 1992.

The British Experience
Electric utility restructuring plans in the United States mirror reforms passed in the early 1990s in the United Kingdom. But the experience there over the past decade suggests that our restructuring experiment is unlikely to reduce prices or increase efficiency. Indeed, the UK experience foretells the likely economic and political trajectory of utility restructuring in the United States ... and it's not encouraging.

"Electricity Markets: Should the Rest of the World Adopt the United Kingdom's Reforms?" by Catherine Wolfram, Regulation 22:4, Fall 1999.

"Transforming Power: Lessons from British Electricity Restructuring," by John Kwoka, Jr., Regulation 20:3, Summer 1997.

"Not Enough Anarchy in the U.K.?" by Timothy Brennan and Karen Palmer, Regulation 21:1, Winter 1998 (part of a large PDF of Letters to the Editor which can be found here: http://www.cato.org/pubs/regulation/regv21n1/21-1ltrs.pdf)

Under the (Economic) Microscope
The new regulatory regime for electricity in restructured markets is incredibly complex. System reliability, transmission and distribution supply and demand, market power issues, and the management of centralized state run power pools are the central problems that regulators face when constructing and managing these new state-sponsored marketplaces. Unfortunately, state legislatures and regulators have yet to find satisfactory policies for addressing these critical issues within the context of these new regulatory experiments.

"Keeping the Power On: How Reliable is Our Electric System Under Partial Deregulation?" by Benjamin Zycher, Regulation 23:4, Fall 2000.

"Competition Requires Transmission Capacity: The Case of the U.S. Northeast," by Douglas Hale, Thomas Overbye, and Thomas Leckey, Regulation 23:2, Spring 2000.

"Electricity Restructuring: Deregulation or Reregulation?" by Severin Borenstein and James Bushnell, Regulation 23:2, Spring 2000.

"Compelling Access to Network Joint Ventures: Progress and Populism at Odds," by Donald Baker, Regulation 17:2, Spring 1994.

"User-Ownership of Electric Transmission Grids: Toward Resolving the Access Issue," by Douglas Houston, Regulation 15:1, Winter 1992.

The "Stranded Cost" Debate
Electric utility restructuring is virtually always accompanied by a taxpayer or ratepayer funded bailout of the losses incumbent utilities face from white elephant nuclear power plants and uneconomic long term contracts entered into prior to the new regime of wholesale competition. Proponents argue that its only fair; the state forced utilities to make many of those uneconomic investments and guaranteed them a fair rate of return on those investments, so the bailout only makes good on the promise. We disagree, and note that the costs of this bailout are proving greater than the benefits alleged delivered by restructuring.

"An Insider's Upside-Down View of Deregulation," by Richard L. Gordon, Regulation 22:2, Spring 1999 (part of a large PDF page of book reviews available at http://www.cato.org/pubs/regulation/regv22n2/bookreviews.pdf)

"Stranded in Sacramento: California Tries Legislating Electrical Competition," by Robert Michaels, Regulation 20:2, Spring 1997.

"Transitional Losses: Criteria for Compensation," by Peter VanDoren, Regulation 20:1, Winter 1997.

"Thirteen Steps to Reconciliation," by Alfred Kahn, Regulation 19:4, Fall 1996.

"Stranded Costs Cut to the Quick," by Richard Gordon, Regulation 19:3, Summer 1996.

"Stranded Costs, Stranded Intellectuals," by Robert Michaels, Regulation 19:1, Winter 1996.

"A Case Against Both Stranded Cost Recovery and Mandatory Access," by William Niskanen, Regulation 19:1, Winter 1996.

PUHCA
The Public Utilities Holding Company Act (PUHCA) governs how electric utilities can legally organize themselves in the business world. PUHCA has contributed to the current mess in California and has outlived any usefulness that they may have once had. Accordingly, Congress should repeal it as a first step toward true deregulation.

"Time to Repeal the Public Utilities Holding Company Act," by R. Richard Geddes, Cato Journal 16:1, Spring/Summer 1996.

"The Public Utility Holding Company Act: The Easy Step in Electric Utility Regulatory Reform," by Richard Gordon, Regulation 15:1, Winter 1992.