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Electricity Deregulation

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Electricity Deregulation

One of the most pressing public policy issues currently facing Texas are the imminent problems associated with electricity deregulation laws.  Although many believe that what happened in California—i.e. the energy shortage—was simply a fluke, analysts now say that similarities in Texas’ electricity deregulation laws may make Texas vulnerable to the same problems experienced in California.  Although many assert that the problems in California were the direct cause of too few suppliers coupled with high demand, the reality of the situation is that the Consumers Union has argued for years that the electricity market is simply not suited for deregulation.  It seems that when it comes to the deregulation of electricity, “the fundamental problem is the characteristics of the commodity are not compatible with markets.  Electricity cannot be stored, there are no substitutes, and there are limits on the ability of buyers to conserve”.

Given the tenuous nature of the electricity market and the importance of electricity to consumers as a whole, Texas should not leave the fate of its electricity to the instability of the market.  Although Texas’ deregulation policy (3)(4) is not exactly like that introduced in California, the reality is that there are currently no known plans that are similar to those that are attempting to be employed in Texas.  Because the outcomes of the California deregulation plan could not be successfully predicted and regulation of electricity in the market has proven successful in the past, it seem prudent to develop public policies aimed at monitoring the regulation polices rather than moving to a system of full deregulation.

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