The most severe energy scandals since Enron highlight the need for competition in the electric power industry
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.