The first step in regulating the electric
industry in the US occurred during the 1930s when the large producers lobbied
with state governments for franchised monopolies. The result was to eliminate
competition in the industry and reliable tax revenue for state governments that
shared the monopoly profit. Abundant energy resources
have kept the price of electricity low.
The main cost of electricity is fuel with
coal remaining the main fuel. Natural gas has grown. Hydroelectric is reliable but limited and unable to expand
due to environmental concerns. Nuclear will become
more important over the coming decades. Alternative solar
and wind power can provide a share of electricity with improved technology.
Interstate retail competition allows
customers to choose suppliers across state lines. Customers in high priced
states such as California, New York, and Florida buy from low priced exporting
states such as West Virginia, Idaho, and Alabama. Interstate
retail competition will raise prices in these exporting states.
The best policy to keep the price of
electricity low is to avoid taxes and subsidies. Consumers facing higher prices
for electricity will naturally economize. The price of
electricity will ultimately depend on investment by the industry.