New York Times Blames ‘Deregulation’ for Regulated Electric Costs
As Americans recover from the recent winter storms, many are also bracing for an additional onslaught when they get their monthly electric bill. Retail electric prices are up in recent years, and while this can be attributed to everything from the war in Ukraine to broader inflationary trends, a recent article in The New York Times claims to have identified the real culprit: deregulation!
According to the Times, “residents living in a deregulated market pay $40 more per month for electricity than those in the states that let individual utilities control most or all parts of the grid.” The Times notes that so-called deregulated states tend to spend more on transmission lines and suggests that this—along with the way electric market auctions are structured and, of course, “energy company profits”—accounts for the higher prices.
This argument is unpersuasive and frankly a little odd.
The first odd thing about the argument is the number of states reported as deregulated: 35. Thirteen states and the District of Columbia allow most of their electric customers to choose their electric supplier. So most experts would say 14 states have deregulated power markets. The Times appears to be counting every state in which a major electric utility participates in regional power markets as “deregulated” too. Included in these 35 are the 14 states with retail electric choice, but the other 21 states keep most of their retail customers locked into monopolies with state-regulated rates. For this reason, industry insiders vastly prefer the term “restructuring” over “deregulation.”
Even in the 14 states that are the most deregulated, the transmission and distribution parts of the business—the “wires” industry segment—remain as a traditional monopoly with state-regulated rates. This leads to the second odd thing about the Times argument: It singles out rising transmission spending as one of the key factors driving prices higher. When the Times says that prices are higher in deregulated states because they are spending more on transmission, it is pointing precisel
Article from Reason.com