Charge of the Light Brigade

ELECTRICITY deregulation is shaping up to be what telecommunications reform was to the last Congress: an issue that consumes Washington lobbyists and policy wonks while boring everyone else into inattention. The reason for this “interest gap” is the same in both cases: the distribution of billions of dollars depends on the outcome of technical policy disputes.

Despite frequent claims that electricity is a “natural monopoly,” the industry had a history of robust competition prior to regulation. Like many Progressive Era economic reforms, electricity regulation was largely a protection racket for established businesses. The rise of independent power producers since the late 1970s, however, has done much to resurrect the possibility of competition. (Their growth was greatly stimulated by federal regulations arising from the “energy crisis.” Not all unintended consequences of legislation are bad.)

About the Author

Ramesh Ponnuru

Ramesh Ponnuru is the editor of National Review, a columnist for the Washington Post, and a fellow at the American Enterprise Institute.

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ELECTRICITY deregulation is shaping up to be what telecommunications reform was to the last Congress: an issue that consumes Washington lobbyists and policy wonks while boring everyone else into inattention. The reason for this “interest gap” is the same in both cases: the distribution of billions of dollars depends on the outcome of technical policy disputes.

Despite frequent claims that electricity is a “natural monopoly,” the industry had a history of robust competition prior to regulation. Like many Progressive Era economic reforms, electricity regulation was largely a protection racket for established businesses. The rise of independent power producers since the late 1970s, however, has done much to resurrect the possibility of competition. (Their growth was greatly stimulated by federal regulations arising from the “energy crisis.” Not all unintended consequences of legislation are bad.)