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Deregulation of electric utilities in Wisconsin / by Andrew L. Hess.

by Hess, Andrew L.

Electric utilities -- Wisconsin -- Deregulation

iii, 60 leaves : ill., maps, charts ; 29 cm.

Regulation versus deregulation -- Privatization of UK electric utilities -- Deregulation of long distance telephone -- Deregulation of the airline industry -- Deregulation/reregulation of the cable TV industry -- Wisconsin utilities to date -- Recommendations and conclusions for Wisconsin.

For better or for worse, most developed countries in the world have and will continue to encourage deregulation and privatization of public services during the last decade of the twentieth century. This trend is creating some interesting problems and opportunities for Wisconsin electric utilities, their regulators, and independent parties. Examining the results of other industries already deregulated provides some insight into the preferred method of deregulation. The United Kingdom’s privatization of the electric utility industry shows that competition in electricity supply is a successful reality. Overcapacity is a threat to this system and must be managed. The deregulation of the U.S. telephone industry proves several things. First, the justice system is not the best place to accomplish deregulation. It takes far too long to complete, none of the parties involved are satisfied with the results, and when completed very little actual deregulation has occurred. Secondly, the average residential customer is not interested in choosing a service for something that has been a “utility” in the past. U.S. airline deregulation has shown that competition does create lower prices and in some ways greater service. It has also shown that overcapacity and a lack of competitors can be dangerous to the industry. It also shows that potential competition is no match for actual competition in a market with difficult market entry and quick pricing response mechanisms.

The cable television merry-go-round of regulation, deregulation, reregulation is another example of good intentions gone bad. In areas with true competition the service was better and the rates lower. Most areas however, had no true competition and as such required regulation to prevent a monopoly from overcharging the public for poor service. Wisconsin faces the same problems that these other industries faced plus a few specific to the electric utility business. Wisconsin must create a system whereby the transmission system and the residential customers remain under utility control. Competition for electricity supply is already started and it must be allowed to move forward without the meddling of regulators. If regulators get too involved through bidding systems, calculating avoided cost, or other tampering with the market system, problems will be created. These problems will take the form of lawsuits which will accomplish little but create wealth for attorneys. Regulators must also continue with a successful method of integrated planning to prevent overcapacity. Accomplishing this transformation from a regulated monopoly to a competitive environment will be very difficult for all parties involved. This means the utilities, the regulators, the consumers, and the independent producers. They all must leave their old way of doing business behind and have the courage to move forward.

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