Electricity Deregulation

10 Pages 2457 Words

Breaking the monopoly that is currently hold by electric suppliers could prove to produce negative results. The monopoly holds the cost of electricity to price floors. Price floors do not allow the price of electricity to fall below a certain amount. The downsides of breaking up the currently monopoly are that the government will no longer regulate the quality of service. This in turn could produce more blackouts and power outages.
Deregulation creates competition among private providers and is supported on the idea that this competition will bring a steady decrease in prices. In the past, this was true for deregulation and therefore created overall lower prices which is shown in the savings of deregulating previous monopolies. The current service that is being debated in the United States is whether the deregulation of electricity will produce the same positive results. States are experimenting with the idea and are slowly taking steps to deregulate electric suppliers and break up the monopolies. Deregulation should be looked at more closely before states blindly make a decision to deregulate the production of their electricity. The deregulation of electricity will produce numerous negative results if states don’t enact guidelines to supervise the production of electricity.
There are three separate and distinct processes needed to supply consumers with electricity. Electricity must be produced, transmitted and properly distributed, before it reaches the everyday consumer. To have a competitive market, it is felt by some that these three processes need to be entirely separated. If a company had control of transmitting electricity in a certain area and also produced electricity in this area, they would favor their own power source whenever a crisis occurs. These three steps need to be separated before true competition can take place, or there would be an unfair advantage for those holding the methods of transmission....