New Approaches on Energy and the Environment

CHAPTER

7

Making Electricity Markets Competitive

How Fast and by Whom?

by Timothy J. Brennan

Expanding competition in historically regulated markets has been a stunning (and largely bipartisan) policy success story over the last 25 years. But thus far, electricity has not been as amenable to similar initiatives. Moreover, recent events, such as the California crisis of 2000–01 and the Northeast blackout in August 2003, have led many to voice concerns about our electricity systems.

We hope that the following provides a useful short guide to help balance the claims these different interests express. In our view, the need to control costs, ensure reliability, and prevent market power in this crucial sector implies that although competition may be ...