Free-Market Dogma has Jacked Up our Electricity Bills

http://economistsview.typepad.com/economistsview/2015/05/free-market-dogma-has-jacked-up-our-electricity-bills.html

May 26, 2015
David Cay Johnston

Free-market dogma has jacked up our electricity bills: A new analysis shows that people pay 35 percent more for electricity in states that abandoned traditional regulation of monopoly utilities in the 1990s compared with states that stuck with it. ....

You might think that the higher prices in the 15 states with markets would encourage investment, creating an abundance of new power plants. That, at any rate, is what right-wing Chicago School economic theories on which the electricity markets were created say should happen. The validity of these theories, and flaws in how they were implemented, matter right now because Congress is considering a raft of energy supply bills that include some expansion of the market pricing of wholesale electricity. ...

Yet just 2.4 percent of new electric generating capacity in 2013 “was built for sale into a market,” electricity-market analyst Elise Caplan showed in a study last fall... The rest were built in states with traditional regulation or under long-term supply contracts that essentially guaranteed repayment of loans to build the plants.

Here’s another measure of failure: Areas covered by electricity markets have 60 percent of America's generating capacity, but enjoyed just 6 percent of new generation built in 2013.

If unregulated markets are invariably better, as the Chicago School holds, why was 94 percent of new generating capacity built in traditionally regulated jurisdictions? ...