Regulated Utilities

Goals

To understand what are the arguments for keeping utilities regulated (at a state level in the US).

Early Findings

  • According to Payless Power, 27 states have regulated electricity and 27 (but not the same ones) have regulated gas.
  • In 2001, deregulation was blamed for California's energy crisis.
  • The state saw a lopsided supply-and-demand leading to rolling blackouts, high rates and some new utilities almost going bankrupt.
  • However, states learned from California's mistake and those deregulating afterwards put sufficient protections (like price caps) in place to avoid the problems Californians faced.
  • In Indiana, electricity is regulated but rather successful. The state has rates below the national average and the utility is managed to so effectively that it makes some question the point of considering deregulation.
  • An advocacy group in Florida is pushing for deregulation. The proposed legislation is modeled after Texas's 2002 deregulation model.
  • Floridian utilities argue that their current model is working fine. Prices are lower than the national average, electricity is apparently clean and reliable.
  • They argue the bill wouldn't stop new utilities from building less-climate-friendly generation.
  • They also state, "A deregulated system eliminates any forum for collaboration and oversight and poses numerous risks to the state and its electricity consumers."
  • Similar arguments were made ahead of ballot initiatives in Arizona and Nevada in 2018. Energy companies claimed deregulation would lead to price increases.

Proposed next steps:

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We proposing leveraging these Early Findings and continuing this research to fully develop a brief describing the key arguments for keeping a regulated utility. This brief will cover what experts are saying, including any facts/figures available like projection models or predictions, about why regulation is good and why deregulation in that state would negatively affect the state. We would look at both electricity and gas unless otherwise specified.
Alternatively, we could also look at the other side of the coin. We could cover 2-3 case studies were deregulation has been positive in a state, including numerical statistics and discussion on positive impact. Since deregulation is quite a broad concept, our research would go back further in time, but we would keep our examples from 2000 onward. We would look at both electricity and gas unless otherwise specified.