Newswise — That competition will lead to lower prices and better service is about as close to a universal truth as economics offers. But the history of electricity deregulation in the United States challenges this notion. For example, deregulation allowed the price of electricity in California to explode a decade ago. After that fiasco, observers realized that electricity markets were far more concentrated and less competitive than had been realized--and that free markets are not the same thing as competitive markets.
At the same time, however, deregulation's effects on market forces increased the use of relatively clean natural gas instead of coal to generate the nation's electricity. And deregulation opened the door to much of today's solar and wind generation. So the deregulation of the U.S. electric power industry has clearly had both good and bad effects.
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