A hodge-podge of state and federal regulations is keeping costs high and interfering with the development of competitive power markets.
Paul L. Joskow, current President of the Alfred P Sloan Foundation and former Head of the MIT Department of Economics (now on leave) and former Director of the MIT Center for Energy and Environmental Policy Research, laid out a history of the electric power regulation and a series of regulatory reform proposals in a speech given at the National Press Club in September last year.
The speech is well worth reading; I will provide excerpts later.
In the meanwhile, allow me to quote an direct summary by Lynne Kielsing at Knowledge Problem. Kielsling, whom I have referred to before, is a well-known expert on the electric power sector, author of "Deregulation, Innovation and Market Liberalization; Electricity regulation in a continually evolving environment", and Senior Lecturer in Northwestern U's Department of Economics and Kellogg School of Management. Says Kiesling:
In brief, Joskow supports completing the task of restructuring the electric power industry by unbundling transmission, distribution, and generation in places where that action has not yet been taken, and installing voluntary RTO-type wholesale power markets in areas not yet served by an RTO. Also, Joskow urges federal loan guarantees for merchant power companies to match the implicit loan guarantees available to state-regulated electric utilities, and wants any carbon permits given away free to go directly to consumers rather than to electric utilities.
But, you say, Joskow’s proposal would run roughshod over existing jurisdictional boundaries between state and federal government. Yes, I say, and I think that is part of Joskow’s point.
He wrote, “Unlike every other energy sector, the electricity sector lacks a comprehensive national policy framework consistent with achieving [current policy] goals.” Much of the nation remains stuck in an organizational and regulatory framework first established in the Federal Power Act of 1935, and federal action is required to help reorganized the industry in a manner better suited to current conditions. Hence his suggestions for a “Federal Power Act of 2009.”
(emphasis added)
More later.