Don Boudreaux has a post on prices as the great equalizer that’s is very important. After looking at two of the different ways of rationing stuff (queuing and family connections), Don points out that
One great advantage of rationing by market prices is that they reduce to a minimum the role of arbitrariness. Price are, in other words, a great equalizer. Anyone who is willing to pay the market price for a good or service is just as likely to get that good or service as is the sellerís mother, neighbor, or bowling buddy.
I would go even further to say that regulation provides another form of rationing (of course I would say that, I work on electricity!), and is prone to much, if not more, of the same arbitrariness and favor that these other non-price methods are.
This is one important reason why retail electricity prices are so important. Not only do they communicate information about preferences and costs better than any alternative rationing scheme, and therefore lead to outcomes closer to efficiency, but they also are not prone to the arbitrariness and capriciousness of rationing by queuing, political favor, or ability to influence regulation or legislation.