The most severe energy scandals since Enron highlight the need for competition in the electric power industry
WASHINGTON (Sept. 23, 2020)—The latest utility scandals in Ohio and Illinois—the most severe since Enron— have sparked calls for electricity policy reform. In a new paper, R Street director of energy and environmental policy Devin Hartman and senior fellow Mike Haugh warn policymakers that these latest instances of corruption are just the next in a long line from the past decade alone.
The authors note: “The Illinois and Ohio utility scandals highlight the flaws of letting electric monopolies mingle in competitive markets. State reforms need to isolate monopolies to distribution systems and enable competitive markets to provide all power generation and retail services.”
The two states attempted to restructure their models for electricity production, but did so in half-measures. This left a monopoly entangled within competitive markets, which enabled conduits for bad utility behavior. Moving forward, Ohio and Illinois—and other states who have adopted similar quasi-restructured models—should remove any monopoly distribution utility entirely and enable competition wherever possible. Now is the moment for states to adopt market-enhancing reforms, introduce more competition and bolster economic outcomes to deter bad political behavior. This will improve the transparency of distribution system planning and operations and help rehabilitate the culture and image of the industry and market while also building in resistance to rent-seeking entities in the future.
Read the full paper, “Electric Competition: The Antidote for Bad Behavior” here.
