Current Issues in Economics and Finance

Lowering Electricity Prices through Deregulation

December 2000Volume 6, Number 14
JEL classification: D21, D40

Authors: Thomas Klitgaard and Rekha Reddy

A wave of regulatory reform is now transforming the U.S. electricity industry. As state and federal authorities allow independent power producers to compete with utilities in supplying electricity, consumers are paying close attention to the effects of this change on their energy bills. Although deregulation poses significant structural challenges, the introduction of competitive pressures should ultimately lead to efficiency gains for the industry and cost savings for households and businesses.

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