Deregulation, Innovation, and Market Liberalization: Electricity Regulation in a Continually Evolving Environment

Lynne Kiesling

I am pleased to announce that I delivered my book manuscript to the publisher a week and a half ago. Here’s a teaser:

Economic growth and technological change have brought the electric industry and its regulation to a crossroads. Technological change from outside the industry has prompted changes in both regulatory institutions and business models, leading to the incremental disaggregation of the vertically-integrated firm in some regions of the U.S. and not in others. Simultaneously, increasing use of market transactions within this vertical value chain provides further strains on the existing institutional environment.

One of the largest challenges facing the electric industry and policymakers today is the mismatch between regulatory and technological inertia within the industry and the vibrant, thriving economic and social dynamism that technological change has helped to create in nearly all other aspects of human society. Is it possible for regulatory institutions to be less inertial, to be more adaptive to unknown and changing conditions like innovation, changes in fuel costs, and changes in environmental policy? This book explores possible answers to that question, focusing particularly on the retail portion of the electricity value chain.

It’s a synthesis of complexity science, Austrian economics, and new institutional economics, focused on how technology enables us to move from centralized control to decentralized coordination.

The manuscript is available for your perusal; the book, published by Routledge, will be available in July.


3 thoughts on “Deregulation, Innovation, and Market Liberalization: Electricity Regulation in a Continually Evolving Environment

  1. That sounds great but the reality on the ground is that generation costs are pretty much the same between merchant and regulated integrated utilities. Merchant generators can escape prior labor agreements but their cost of capital will be higher to offset. In other words, merchant plants can bust unions and escape pension liabilities while paying more for equity and capital to investors who are willing to take more risk (see Calpine.)

    The technology of generation for each performance class is common between types of generator organization since hardware vendors sell to both.

    I hope no one is proposing duplicate or triplicate transmission and distribution wires as a cost-saving measure!

    “Vibrant, thriving economic and social dynamism [from] technological change” sure sounds good but the business case for specific improvements remains unconvincing.

    The best argument is hope for an escape from non-productive political interference that sometimes amounts to literal extortion. Tell me how to do that!

    I will look at your book – if it can show me how to make some money in the electric business, great!

  2. That sounds great but the reality on the ground is that generation costs are pretty much the same between merchant and regulated integrated utilities. Merchant generators can escape prior labor agreements but their cost of capital will be higher to offset. In other words, merchant plants can bust unions and escape pension liabilities while paying more for equity and capital to investors who are willing to take more risk (see Calpine.)

    The technology of generation for each performance class is common between types of generator organization since hardware vendors sell to both.

    I hope no one is proposing duplicate or triplicate transmission and distribution wires as a cost-saving measure!

    “Vibrant, thriving economic and social dynamism [from] technological change” sure sounds good but the business case for specific improvements remains unconvincing.

    The best argument is hope for an escape from non-productive political interference that sometimes amounts to literal extortion. Tell me how to do that!

    I will look at your book – if it can show me how to make some money in the electric business, great!

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