December 19, 2014

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December 17, 2014

December 16, 2014

Energy Innovation: Monopoly vs. Competition

When does a monopoly hinder innovation? I would assert the answer is “always.” The American free enterprise system thrives on competition. The search for a better mousetrap has long been touted as the driver of innovation. Competition sends signals to the marketplace; signals which are read, interpreted, and responded to. Utilities were established as “natural monopolies,” deemed necessary to either prevent “waste” or to overcome large initial start-up costs. In granting utility monopolies there was a regulatory compact: in exchange for the monopoly the utilities agreed to be regulated to ensure market pricing and other market-like terms and conditions of service. But simulating artificial markets cannot substitute for the real thing. The natural gas industry has been partially “deregulated,” and competition has driven innovation and market pricing. The telephone industry has been partially deregulated and competition has driven innovation and lower prices. What can we expect when electric generation (but not distribution) is deregulated? Let’s get to it. If this is Michigan, where is the innovation?

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About this Author

Bruce Goodman, Varnum Law Firm, Environmental Attorney
Partner

Bruce Goodman practices environmental law, energy law and construction law. His environmental expertise includes air quality permitting work, compliance counseling on air emissions, state and federal enforcement defense issues, and environmental management program development. His energy expertise includes negotiating numerous electric power sales agreements, both for wholesale sellers of energy and for retail consumers of energy, state rate cases, developing municipal energy tariffs, and energy project permitting....

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