Study shows electricity deregulation can work

A study released by the Los Angeles-based pro-privatization Reason Public Policy Institute (RPPI) indicates that electricity deregulation has succeeded in several states. The study, “Getting Deregulation Right: How Other States and Nations Have Avoided California’s Mistakes,” examines recent deregulation efforts in Pennsylvania, Rhode Island and Massachusetts in comparison with California’s experience.

For example, the study reports that Pennsylvania passed electricity deregulation at the same time that California restructured its electricity market but avoided many of the problems that California has experienced. While California is in the midst of blackouts and rate hikes, Pennsylvania’s customers have seen an average price decrease of more than 30 percent since deregulation.

Author of the study, Lynne Kiesling, director of economic policy at RPPI, offers recommendations to states considering deregulation, including:

• accelerating the phase-in period for customers to choose electricity providers,
• encouraging consumers to shop for competing providers by setting high default prices, and
• encouraging the use of voluntary regional exchanges and clearinghouses rather than centrally controlled state power changes.

• Copies of the study are available for $15 by calling RPPI at (310) 391-4395 or may be accessed free at the RPPI Web site, http://www.rppi.org.