Electricity’s Un-Natural Monopoly

The U.S. electricity system is undergoing the biggest change in its 130-year history, undermining the rationale for monopoly ownership and control.

Until recently, electricity service was similar to water or roads, where a natural monopoly was most efficient. Only a single, standardized electric grid was needed to connect each building. Technology options were limited to steam-powered turbines fueled by coal and oil, or large hydro dams with massive economies of scale. There was very little long-distance transmission of power, as each utility was responsible for electricity service within its own territory. Growth in demand was exploding and monopoly utilities could wield the most cost-effective financing for new power plants. These natural monopolies paid off for customers, with falling costs of reliable electricity even as demand rose rapidly.

via Electricity’s Un-Natural Monopoly.

Categories: Electricity, Energy