Deregulation in the electric utility industry: Excess capacity and the transition to a long-run competitive market

Eric Thompson, Frank Scott, Mark Berger

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

Existing analyses of electricity deregulation have focused on situations where horizontal market power is present. This paper instead evaluates a market where a competitive outcome is more likely. Competitive market supply and demand curves for electricity have been simulated for a twenty-state region. These simulated supply and demand curves are used to predict short-run and long-run prices for electric power. Many consumers will see a drop in the portion of their electric bills accounted for by the current economic costs of supplying them with electricity. Adjustments to consumers' bills for stranded cost recovery will be determined by legislators and regulators on a state-by-state and utility-by-utility basis. Because of excess capacity that currently exists in the industry, the decline in prices will be greater in the short run than in the long run.

Original languageEnglish (US)
Pages (from-to)1-20
Number of pages20
JournalGrowth and Change
Volume35
Issue number1
DOIs
StatePublished - Dec 2004
Externally publishedYes

ASJC Scopus subject areas

  • Global and Planetary Change

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