By Travis Fisher & Nick Loris
Creativity and competition are at the heart of dynamic economies. Thanks to modern reforms in industries previously regulated as natural monopolies, American consumers have reaped huge savings. Our lives are better today because of the successes of restructured industries as diverse as telecommunications, rail and airline transportation, and—to some extent—electric utilities.
So why is electricity the ex-monopoly in which consumer prices constantly go up while measures of quality (like reliability) are flat or declining, no matter how much competition we throw at it? As consumer groups have pointed out, we still don’t have definitive answers to this question, and we should keep digging. In our view, competition hasn’t delivered benefits to electricity consumers because we haven’t really given it a chance.
When we talk about competition, we mean the open-ended market process of willing sellers competing to do business with willing buyers (no monopoly privilege, mandates, or subsidies). Sellers strive to beat out their peers while contending with the fact that the …