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CEIC-04-03

"Rethinking Electricity Deregulation"

Lester B. Lave, Jay Apt, and Seth Blumsack

Abstract:
Proponents of free markets for electricity assert that minor fixes to the California market and to FERC’s standard market design (SMD) would generate lower prices. We disagree. Designing a competitive market that remedies the problems seen in California and other restructured markets is difficult; emulating even good ISOs like PJM will not do the job. Each one of the problems can be overcome, but the costs of doing so might make full deregulation unattractive.

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