Saturday, August 21, 2010

What if the energy industry was deregulated?

An analogy for deregulating the energy business can be found in the railroad business... thirty years ago. By two simple measures (productivity and prices), it was a tremendous success. By a third (saving an industry), it was brilliant. If we applied the same logic to the over-regulated utility business, productivity would soar, while prices to consumers would drop.

For instance, if utilities were allowed to keep a portion of additional profits they generated due to innovation, they would surely innovate. How difficult could it be? Right now, any additional profit needs to be handed right back to consumers. Where is the incentive to innovate? If 1/2 went to the utility and 1/2 went to consumers, prices would drop, while more-efficient (read: "greener") power would be produced. Isn't that what we all want?

Surely, logic must persist!

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