Podcast

Grid Forward Debate: Has Electricity Deregulation Led to Better Community Outcomes?

Electricity market deregulation promised to bring more affordable and reliable electricity to consumers. A quarter of a century after deregulation began, has its promise delivered for all Americans?

The process of deregulating electricity markets began a quarter of a century ago, with the aim of leveraging competitive market forces to provide consumers with abundant and reliable electricity more economically than ever before. As experience has shown, however, deregulation has brought both benefits and challenges

In the early years of deregulation, an ill-conceived strategy to introduce competition to California’s electricity market led to market manipulation, high energy prices, and ultimately to utility bankruptcies. Yet over the last decade, deregulation has provided generally better outcomes. Competitive markets have been able to efficiently pass cost savings from the shale gas revolution to consumers, and competition has created a dynamic platform for the entry of new forms of clean and distributed energy.

Yet the question remains. On the whole, has deregulation delivered on its promise to give consumers abundant and reliable electricity more economically than before?

This special episode of Energy Policy Now was recorded live at Grid Forward 2020, an annual event that brings together leading insights from a range of stakeholders to address opportunities for electric grid modernization. Debaters Mark Kolesar and Bruce Edelston square off around the question of whether deregulation has ultimately led to better community outcomes which, in today’s context, means more than just cheap and reliable service, but also equitable access to clean energy options, and the environmental and public health benefits that a cleaner electricity system promises.

Grid Forward is an industry association defining pathways for electric grid modernization via advanced technology, policy progress and business innovation.

ANDY STONE: Welcome to the Energy Policy Now podcast from the Climate Center for Energy Policy at the University of Pennsylvania. I’m Andy Stone. A quarter of a century has passed since deregulation came to America’s electricity markets. Deregulation was intended to bring competition to the electricity industry, driving innovation that would provide consumers with more affordable and reliable electric power than ever before.

Has deregulation delivered on its promise? That question is the focus of this special episode of the Energy Policy Now podcast. Earlier this month we were invited to host a debate on the issue at GridForward 2020, an annual event that brings together leading insights from a range of stakeholders to address opportunities for electric grid modernization. What follows is that debate in full. Here we go.

The process of deregulating electricity markets began a quarter of a century ago, with the aim of leveraging competitive market forces to provide consumers with abundant and reliable electricity more economically than ever before. As experience has shown, however, deregulation has brought both benefits and challenges. In the early years of deregulation, an ill-conceived strategy to introduce competition to California’s electricity market led to market manipulation. High energy prices, and ultimately two utility bankruptcies.

In the wake of the crisis, many wondered if the grand experiment of deregulation had come to an early end. Yet over the last decade, deregulation has provided generally better outcomes. Competitive markets have been able to efficiently pass cost savings from the shale gas revolution to consumers. And competition has created a dynamic platform for the entry of new forms of clean and distributed energy.

Yet, the question remains. On the whole, has deregulation delivered on its promise to give consumers abundant and reliable electricity more economically than ever before. And as we’ll explore in today’s debate, has deregulation ultimately led to better community outcomes, which in today’s context means more than just cheap and reliable service, but also equitable access to clean energy options, and the environmental and public health benefits that a cleaner electricity system promises.

The question of whether deregulation has been a positive or a negative for consumers is timely, and is the topic of our debate. Today’s debate will argue yes or no to the following statements: electricity deregulation leads to better community outcomes. I’m Andy Stone, producer of the Energy Now Policy podcast from the Climate Center for Energy Policy at the University of Pennsylvania, and guest host for this podcast debate at GridForward 2020.

I’m here with our two debaters, both of whom are deeply familiar with the topic of electric industry regulation, yet each brings an opposing view on the merits of deregulation itself. Arguing for the motion is Mark Kolesar, managing principal at Kolesar, Buchanan & Associates. Mark, welcome to the debate.

MARK KOLESAR: Thank you.

STONE: So you are the former chairman of the Alberta Utilities Commission where you served for twelve years, and Alberta has embraced wholesale and retail deregulation, and I imagine you have gotten to see many of the changes that resulted from that.

KOLESAR: Yes, I have. And I’ve had to deal with a lot of the challenges of trying to get all of the market rules right. And I’ll be talking not specifically about that Alberta situation, but I will be speaking to what some of the challenges are with respect to trying to get all of that right.

STONE: And the debater arguing against today’s motion is Bruce Edelston. Bruce is president of the Energy Policy Group. Bruce, welcome to the debate.

BRUCE EDELSTON: Thank you. Happy to be here.

STONE: So you spent 25 years with the Southern Company most recently as its vice president for energy policy. Southern operates, as many know, in a part of the United States that embraces cost of service regulation. In your career, I imagine that you’ve been involved in many discussions over the relative merits of deregulated and cost of service markets.

EDELSTON: Yeah, that’s right. At one point we even went so far as to explore the idea of setting up an ISO or RTO in the Southeast, and deregulating, and went fairly deep into the process before the State Commission decided that they sort of liked the way things were, and that sort of ended that.

STONE: Okay, once again, Bruce and Mark, welcome to the debate. Today’s motion is electricity deregulation leads to better community outcomes. We’re going to run this debate in three rounds. In the first round, each debater will make an uninterrupted statement supporting his view. Round two will be our question and answer round, when the audience will have the opportunity to submit questions through the GoTo platform for our debaters.

And next will be our third round, and it’s also our final round, when our debaters will make their final statements. And at the end of today’s debate, I’ll read the results of our poll that will ask the audience whether their views have been shifted by today’s debate. And to our audience that poll will show up in your GoTo meeting screen. So without further ado, going first and speaking for the motion, please welcome Mark Kolesar, managing principal at Kolesar, Buchanan & Associates. Mark, you have five minutes for your opening statement.

KOLESAR: Thank you, Andy. So yes, let me jump in. I think it’s pretty clear that competition, however imperfect it might be, provides incentives that promote allocative, productive, and dynamic efficiencies. And those drive the cost of production down, and move prices towards marginalized costs for both the incumbent utility and new entrants. And it’s difficult to promote or emulate in a regulatory structure, what competition can actually do. It’s not impossible, there are some forms of performance-based regulation that help to get us there, but I would argue that nothing gets you there as well as what competition does.

So the benefits of competitive entry for consumers are generally expected to be more innovative product offerings, more choice in product offerings, better value per dollar of spend, better customer service, and greater reliability. The question is whether these benefits are actually occurring in utility markets where competition has been introduced. My answer is that these benefits are generally occurring, but not uniformly across all jurisdictions, or across all rate classes. However, this is often the result of poor market design or market regulation failures, all of which can and are being rectified over time.

So let’s see what’s actually happening in the market. First, there’s ample evidence that deregulation of wholesale markets in the US and elsewhere, where wholesale providers have been given non-discriminatory access to transmission networks, has fostered a wholesale competitive market that’s reduced the wholesale cost of electricity by literally billions of dollars annually. This result in itself I think is ample evidence that allowing competitive entry into the monopoly electricity market has been a success at least in the wholesale arena.

However, those who argue that competition has failed, point to alleged failures in the retail market. And let’s see what’s happening there. A Christiansen study in 2016 reported that where retail choices offered in the US market about half of all commercial and industrial consumers have chosen non-utility service providers. And that’s ostensibly because new entrants are providing benefits that, in turn, the incumbent utilities must attempt to match. The result in my view is that all customers in these markets, whether served by a new entrant or an incumbent utility, have benefitted from the introduction of retail competition.

In addition, there are arguably multiplier effects in the economy that the introduction of competition in the electricity market for commercial and industrial customers, that benefit the economy at large, and many, if not all, consumers. But the arguments against the benefits of competitive entry in the electricity market generally ignore this effect. However you measure it, I would conclude that competitive entry in at least that part of the market is a success.

Where most allegations of market failure arise is in the residential consumer market, where only about 2.4% of these customers were taking service from a new entrant at the time of the Christiansen study. However, many other jurisdictions in Canada, the UK, Europe, and Australia, often show much better results in the consumer market. The failures in many US jurisdictions have been cited in various studies as failures in the unbundling of network elements, the complexity and cost of switching, inadequate dissemination of market information, particularly among lower [UNINTEL] [00:09:54], inappropriate rules with the supplier switching, and early failures with respect [UNINTEL].

I won’t argue that these failures have occurred, the introduction of retail competition in a heretofore monopoly market is an inherently messy exercise, and one that involves a degree of trial and error on behalf of policymakers and regulators. But I would argue that all of these market failures are ultimately rectifiable in time, and that policymakers, legislators, and regulators that have embraced competitive entry have taken steps to deal with these market failures and continue to do so.

There’s also evidence that retail choice has successfully promoted green energy market participation. New entrants have generally been the ones to promote green energy alternatives as a means of market differentiation to create a competitive advantage. And incumbents have subsequently been encouraged to follow suit. I think this is an important and often overlooked benefit of retail competition.

So this brings me to my final point, which is that competition for the regulated utility is already happening in electricity markets virtually everywhere with the advent of distributed generation and self-supply alternatives, and the introduction of the consumer as a prosumer. In my view, regulators and policymakers have no choice but to embrace this evolution, and work towards an orderly transition to a more competitive market. So that concludes what I have to say at this point, so back to you Andy.

STONE: Thank you, Mark. Bruce, it’s now your turn. You’ll be arguing against the motion electricity deregulation leads to better community outcomes. Bruce, you also have five minutes to make your statement.

EDELSTON: I want to start out with a little bit of history as to why deregulation is not only not ideal for customers who ultimately ought to be what we’re concerned about in the community,  but also in the end may not be possible in the way that we typically think about deregulation. I want to go back to the Supreme Court decision of 1876 known as Munn v. Illinois, which actually dealt with grain elevators and whether or not the State of Minnesota had the right to regulate and set the prices for storage of grain products in those silos you see all over Minnesota.

And the Supreme Court interestingly enough didn’t rule based on the monopoly status of those grain silos, but rather that it was a business affected with public interest. And therefore, the state had a role to play in making sure those grain elevators followed the public interest. That particular Supreme Court was cited over and over again in the coming years, and kind of became one of the primary bases for regulation of — with gas electric utilities.

And the fact of the matter is what it boils down to is electricity is a political animal, the electricity markets are political, governed by policy of the states. And as long as that’s true, deregulation is going to be difficult, if not impossible to achieve. But when we talk about deregulation, I think we have to talk about what we mean, because there are different forums. Mark focused a lot on retail markets and customer choice, which is certainly one point of deregulation.

There’s also deregulation of wholesale markets, which actually happened earlier than retail markets. And wholesale markets have been deregulated not only in some states that have restructured, but also states that still have vertically integrated utilities. Most of them also have competitive wholesale markets. Then there’s the difference between energy and capacity. Energy markets are the sales of kilowatt hours that are used on a second to second, minute to minute, hour to hour basis, can be deregulated.

And capacity, which is building enough generation, kilowatts or megawatts, to meet customer demand [UNINTEL] [00:14:10] is also a separate market which may or may not be deregulated. And then finally there’s transmission distribution markets, for which there probably isn’t very much controversy. I think most people would agree that those markets are natural monopolies and probably will remain regulated for the foreseeable future.

I actually fully support deregulation in the wholesale markets, particularly in energy markets, as long as there’s no market power. And competition I think among various generation choices and suppliers is a good idea, and can lead to lower cost to customers. And power should be economically dispatched, whether it’s based on actual marginal cost as in the case of vertically integrated utilities, or based on bids as in the case of the restructured markets.

The major problems with deregulation are in two areas, one is in retail markets, and the second is capacity markets. With respect the retail markets, the beneficiaries, as Mark pointed out, have primarily been larger customers, commercial and industrial with buying power. But residential customers really haven’t seen much benefit from retail choice. Most of them are remaining on the default service for local utility. There’s no evidence, although there have been lots of studies that have shown that retail competition has not resulted in lower rates to customers. There have been a reduction in prices in restructured markets, but a lot of that has been due to fuel mix and not because of retail competition.

If wholesale competition is working to provide the best or lowest generation prices, you have to ask the question, what additional value does retail competition or retail supply bring. My grandmother always used to say, don’t buy at retail when you can buy wholesale, and I think that’s probably true of retail markets as well. Mark mentioned some potential advantages such as innovative product and services, but I think those are also being offered by regulated utilities.

The real issue for deregulation I think is whether or not it’s going to provide sufficient capacity in the future. The ISO and RPOs generally found that energy markets alone don’t do the trick, and decided to build new capacity markets. They tried a series of rule changes to try to fix problems, non-investment in new capacity, and finally a new tool was developed known as capacity markets. But capacity markets were developed not only for ensuring capacity for a short period into the future, about three years in the case of PJM, and I think most others around the same.

There’s not enough time here to go into all of the problems with capacity markets, but the current problem or issue that everyone is trying to deal with is the fact, going back to Munn v. Illinois, that electricity is affected with a public interest. The generation of kilowatt hours have environmental consequences, and therefore, states are going to make policy choices as to how generation is done within the states. The Federal Power Act of 1935 gave states clear authority to decide generating capacity within states, and FERC has been dealing with trying to harmonize state capacity market decisions with federal wholesale markets.

Therein lies the problem essentially. Electric generation is not a fungible commodity like bananas in the supermarket, but it has characterized, particularly environmental, that are important. And most importantly, sufficient generation is essential to reliability and resilience of the electric grid. The experience in California over the past couple weeks and months, where they’ve been pretty much going up against capacity constraints is pretty scary and perhaps a cautionary tale as to whether or not relying on competition would ensure reliability. But that’s a debate that we could probably leave for another day.

So politics, or maybe more accurately policy, has remained a fixture in deregulated markets, and that will continue. And one needs to ask the question whether or not those markets really have been deregulated. Some will say that regulated traditionally vertically integrated utility have their own problems, and that’s certainly true. But capacity is not one of them. Federal regulated utilities have done very well in ensuring that reserve margins are satisfied, and reliability is maintained.

Some will say that that certainty comes at a cost, and that’s also true. But sometimes consumers buy insurance to avoid the worst consequences, bad decisions, and to some extent regulation can be thought of as an insurance policy for customers. I would also note that regulated markets aren’t devoid of competition. I mentioned wholesale competition. Southern Company where I used to work was required to go after a competitive bid for all new capacity that it brought on to the system.

So the fact of the matter is that there are regulated elements in both restructured markets and traditional markets, and deregulated elements in both markets. My theory has always been that we’re probably going to reach some convergence, where we don’t have regulated or deregulated markets, but instead we just have an electric grid that has elements of both. That’s my statement.

STONE: Bruce and Mark, thank you both for your statements. We now move to round two. And in this round, our debaters will take questions and address each other directly. Again, our motion is this. Electricity deregulation leads to better community outcomes. So Mark, in your statement you essentially said — you said a number of things, but one thing that stood out for me was that you said that through deregulation we’ve seen more innovative product offerings. But you also said that this has not been uniform and not equally across all rate classes. And where it isn’t, or where it has not been equal, it’s not necessarily the fault of the markets themselves but of the policies.

Bruce, you pointed out the fact that business customers, industrial and commercial customers have benefitted generally more from deregulation, particularly in the retail markets, than other customers. There’s no evidence of lower rates due to deregulation. And that falling prices, where they have come, have often been a result of fuel mix issues. I assume that’s related primarily to natural gas rather than the markets themselves. So let me go ahead and ask you first a few questions, and again I invite the audience to submit your questions as well.

But let’s go to this first one here, and this is for Mark. As Bruce stated, commercial and industrial customers have taken advantage of competitive retail electricity service where it is available, while residential consumers have not opted for competitive supply at nearly the same rate. Now from the customer or the community side of this, what I take away is that at least from their perspective, deregulation doesn’t provide benefits that outweigh the risks of being involved in a competitive retail situation. What would you say to this?

KOLESAR: I’m not sure that’s completely true. I mean, from a lot of the research that I’ve looked at, part of the issue for customers at the consumer end is having an adequate understanding of the value of switching to a different supplier given the relative amount of spend in their household. So how much trouble do I want to go to to go and look for an alternative supplier if it’s unclear to me what the real advantages are to me. Do I save enough money? Do I have enough — is there enough alternative choice there.

Now in some jurisdictions you’re starting to see more and more alternative choice, and for example, if you start to look at jurisdictions that are beginning to provide for the opportunity of time of use rates, and you’re seeing in jurisdictions where the pricing of electricity is relatively high, you’ll start seeing consumers seeing the advantages of the potential to make that type of a switch. But when my actual cost of delivered electricity is relatively low, say relative to what my grocery bill is, am I going to put a lot of effort into trying to find an alternative form of supply?

So to the extent that the alternative is easy, it’s obvious, it’s being marketed in a way that I as a consumer see that, yeah, there’s an advantage to that switch and it’s easy for me to do, jurisdictions that manage to do that, you’ll see a lot more switching even though the relative value to the consumer was not significantly high. So there’s a real mix of market problems, or market challenges for a competitive retailer. Even just trying to attract the consumer, that doesn’t mean there’s not the opportunity to get the consumer to save. But it needs to be relatively important to them to go through the exercise of actually doing it.

So one of the questions that you’d want to ask yourself is, do people actually look at their bill? Like, do they actually care? Do they care enough that they’re going to look at a competitive retailer? And I think certain conditions have to come into play before the residential consumer is sufficiently interested in going to all of the trouble to switch. And that’s been sort of what some of the problem has been.

So it doesn’t mean that retail competition — the consumer isn’t working, or it’s not a good thing, it may just not be as important to the consumer as it would be for the commercial or industrial customer, where their spend, relative spend is much higher. And so they have much more of an incentive to look for an alternative. So there’s a lot going on there, and I’ve probably take more time than I should have to answer your question.

EDELSTON: No, I agree with Mark. There probably are not enough savings to make it worthwhile for residential customers to shop for power unless they’re forced to. In Texas, which is interesting, the incumbent suppliers weren’t allowed to continue to provide service to any customers. So there they have 100% uptick of competitive suppliers. But that was just by government fiat. And I think as wholesale markets become more and more efficient, the rationale for retail supply, particularly for residential and commercial customers is going to probably lessen even further.

STONE: Okay Bruce, you alluded to this following topic at the end of your initial presentation. I want to bring it back here. So I’d like you to respond to the argument that regulated markets are fundamentally ill suited to bringing about the types of innovation that deregulated electricity markets can provide. Can you tell us why regulated markets might be, let’s say equally as good at incentivizing new forms of technology particularly at the scale and speed needed to address immediate community environment and larger climate challenges.

EDELSTON: Well, to the extent that carbon free, large generating plants like nuclear are still needed, I think the only way you’re going to get those filled is in a regulated environment. But most utilities have to do integrated resource planning, they have to demonstrate to the regulators that they are still the best option available for their customers, and therefore they have to look at new technologies.

When I was at Southern, we had to examine just about every new technology and compare them to other options before we decided on any particular path. So I think it’s true that regulated markets can be — maybe not as quickly as deregulated markets, I will give you that, but I think they are able to bring forth new technology, and I think experience has shown that they’ve been successful at it.

STONE: Mark, is your view equal to that, that the regulated markets can also bring sufficient innovation to the system?

KOLESAR: I think in the absence of a genuine incentive to do so, I would say no. But I think as the market continues to evolve, and you’re starting to see the implications of technology, the implications of the advent of prosumer, you’re going to see the regulated providers having a greater incentive to be much more innovative. Because a lot of their customers are going to have an opportunity to start looking at other alternatives and going off the grid, even in the absence of retail competition.

STONE: Mark, here’s another question I’d like to ask you, at least to start. Some would argue that the deregulation of electricity markets exposes consumers to more energy price volatility, or at least uncertainty about their future bills. And that this can be particularly damaging to low income communities. What do you say to the statement that cost of service regulation best protects these communities from the dangers and uncertainties of competitive electricity markets, particularly I think on the retail side.

KOLESAR: Well, the first piece of my response is I think the volatility is more a function of the wholesale market than the retail market. And what I’ve seen in a lot of jurisdictions with respect to retail competition, one of the things that a competitive retail alternative provides is actually certainty with respect to what your bill is going to look like every single month. So you can basically sign up for an extended period of time for an electricity rate at a set price.

And what that does is it actually takes any of the market volatility away from the consumer, and the retailer now absorbs all of the risk of market volatility. So I think there’s an argument that within a retail competition environment, that there’s actually perhaps better alternatives to insulate the consumer from market volatility. Because that risk is now borne by the retailer, not by the consumer.

STONE: So I’ll move on to our next question, this one goes to you, Bruce.

EDELSTON: Okay.

STONE: Economists stand to be in general agreement that the most efficient way to reduce carbon emissions in the energy industry is through the implementation of a carbon price, yet the climate impact of a carbon price could be muted through traditional regulated markets, where the opportunity cost of the carbon price would not be so immediately felt or apparent. To what extent do you think that regulated markets are compatible with carbon pricing? And this is particularly relevant right now here in the States, the FERC just had a technical conference on carbon pricing. So it looks like something is coming, at least those markets.

EDELSTON: I have a couple of answers to that. The first thing is if we went to carbon price, it would affect the dispatch of regulated utilities. They would factor in carbon prices into the price of dispatching a power plant. So bigger power plants would get dispatch earlier in the overall merit order of generators. So that would have an effect. It would certainly also have an effect on planning for new generation, because the carbon price as it already is in a lot of cases, but it would have to be reflected in comparing future generating options. So when we’re considering a natural gas plant, one would have to take into account the cost of carbon compared to alternatives, non-fossil fuel alternatives. So I think the price signals may not be as immediate in regulated markets, but I think they would still be there.

KOLESAR: If I can jump in there. Look, the point of a carbon price is that you want to encourage more demand side management. And I think when you don’t have a price signal that’s as immediate as it can be for the actual consumer who is going to consume the electricity, you really severely blunt anything that you’re trying to achieve with a carbon price. And in fact, in my mind what it does is it really just turns a carbon price into a form of taxation that really does nothing to affect the demand side outcomes that you’re trying to get.

So I would argue that it’s not impossible in a regulated or un-deregulated retail market to have an effective carbon price. But the regulated utility has to see that actual carbon price show up on the consumer’s bill. It needs to be visible to the consumer to actually affect the behavior of the consumer on the demand side. So I think you can do it, it’s just a question of how do you want to structure what your carbon price is.

STONE: Bruce and Mark, thank you for that section. We will now move on to round three of our debate. In this round, the debaters will make their closing statements. They will focus in particular on how regulated or deregulated electricity markets may best address the priority issues of energy, equity, and climate change. So Bruce will offer his closing statement first, arguing against the motion that electricity deregulation leads to better community outcomes. Bruce.

EDELSTON: Well, when all is said and done, I view electric generation, and electric generation capacity as such a vital resource, both to local, state, and national economic vitality, but also to the environment and to the community which is at issue in this discussion. And that will become even more true as renewables become a larger part of the grid. It’s going to be important that we have enough fixed capacity to back up the variability of renewable resources. And one would hope that the deregulated market can make sure that enough batteries are installed or enough gas fire generation is still around, isn’t retired, that renewables can provide the reliability that we need.

But I’m just not so sure, and to me it’s a big gamble to take. Fixed capacity is going to have to be paid for to ensure 365 day, 24 hour reliability. And markets alone I don’t think will suffice. I think we’re going to have to have some sort of regulated solution. I think capacity markets to some degree are a partially regulated solution, although they have elements of competition in them too. I think we’ll continue to have retail competition, but I think only — it makes a big difference for commercial and industrial customers.

I think it’s going to be more difficult with retail choice for long term investment decisions, and that worries me, that we’re not going to — we’re probably not going to build very much fixed long term capacity in deregulated markets in the future, whether it be natural gas, whether it be hydrogen, whether it be nuclear, or whatever. And finally, I think we’ll continue to see significant benefits from wholesale competition in both regulated and restructured markets. And I encourage that. I think we ought to continue to expand the geographic boundaries for such competition, because the larger the area where joint dispatch or economic dispatch occurs, the lower the cost for customers.

STONE: Bruce, thanks very much for that statement. Mark, let’s move on to you. Your final statement for two minutes.

KOLESAR: All right, thank you. I would agree with Bruce that certainly there’s no opportunity I think to deregulate wires cost themselves. They are a natural monopoly, and in the absence of significant technological change, I don’t see that they’re not going to continue to be the natural monopoly portion of the electricity system. I think wholesale deregulation has been a huge success. I think it will continue to be a success. I’m not going to spend a lot of time looking at capacity markets, we don’t have time for that. But I think that a well structured capacity market, I think I would agree with Bruce that that can actually serve well.

On the retail side, I think there are tremendous advantages to allowing for retail competition. Even though you can cite examples of where the regulated utility has begun to or has provided some of the benefits that one might see in a deregulated retail market, I would argue that none of that would have occurred had it not been for deregulated retail markets providing an opportunity for those kinds of alternatives to actually come to the surface.

One of the interesting papers that I would encourage people to read is one, it’s quite old now, it’s by Weissman and Pfaffenberger I think is the name. And it’s a paper on the fact that innovation is a process of discovery. And in the absence of an incentive to have to go and discover alternatives, because you’re faced with competition, a lot of that discovery simply doesn’t matter, or doesn’t happen. And it doesn’t happen because you don’t have an incentive to be creative, you don’t have an incentive to go and look for market alternatives in the absence of a competitive desire to do so.

So I really perhaps am predominantly, philosophically of the view that in the absence of competitive alternatives, there’s really very little, if any, incentive for the regulated utility to start looking at alternatives to what they’ve always done. And I think what we’ll see, as I said before, is that even in the absence of retail competition in some jurisdictions, I think the advent of technological change, and the increasing opportunities for customers to self-supply probably more in some rate classes than perhaps the residential rate class, but increasingly there as well.

I think that in itself will start to provide some of the same incentives that a deregulated retail offering would provide to the incumbent to start to be more creative than they otherwise might have been. So I would argue that you’re just not going to get the same outcomes in an un-deregulated market as you will in deregulated market.

STONE: Bruce and Mark, thank you for your closing statements in the GridForward Energy Policy Now debate. We had planned to have a poll here, it looks like due to technical difficulties we will not have that poll. So that concludes our debate today. Again, thank you to all our audience from Mark, Bruce, and me, and thanks on behalf of GridForward and the Energy Policy Now podcast for making today’s debate possible. Have a good day.

Thanks for listening to this special Energy Policy Now GridForward 2020 debate. Our debaters have been Mark Kolesar, managing principal at Kolesar, Buchanan & Associates. And Bruce Edelston, president of the Energy Policy Group. Visit the Climate Center for Energy Policy’s website for a wealth of research events and blogs from leaders in the field of energy policy. You can get updates from the center by subscribing to our monthly newsletter. The newsletter link is on the Climate Center’s homepage. Thanks for listening to Energy Policy Now, and have a great day.

guest

Mark Kolesar

Managing Principal, Kolesar Buchanan and Associates
Mark Kolesar is Managing Principal at Kolesar Buchanan and Associates, and former Chairman of the Alberta Utilities Commission.
Bruce Edelston headshot
guest

Bruce Edelston

President, Energy Policy Group
Bruce Edelston is President of the Energy Policy Group and former Vice President for Energy Policy at the Southern Company.
host

Andy Stone

Energy Policy Now Host and Producer
Andy Stone is producer and host of Energy Policy Now, the Kleinman Center’s podcast series. He previously worked in business planning with PJM Interconnection and was a senior energy reporter at Forbes Magazine.