How deregulation made electricity more expensive, not cheaper

https://theconversation.com/how-deregulation-made-electricity-more-expensive-not-cheaper-272780

Publish Date: 2026-02-18 08:48:00

Source Domain: theconversation.com

Rising Electricity Prices: Over the last five years, the generation portion of residential electric bills in Columbus, Ohio, has increased by 110%, reflecting a national trend in energy affordability issues.
Political Implications: Energy affordability is becoming a significant election issue in American politics, with over half of U.S. adults expressing concern about electricity prices.
Deregulation Fallout: The initial promise of electricity deregulation, designed to reduce prices through competition, has instead led to the rise of middlemen marketers, complicating rather than simplifying the retail electricity market.
Middlemen and Deregulation: Deregulation has not delivered the expected competition but has instead created a complex system where middlemen marketers influence electricity rates, often in ways not aligned with market fundamentals.
Two Pricing Options: Consumers have two options: participating in an open market with retail suppliers or remaining on a default service selected by the utility company. The former often yields less favorable rates than the latter due to lack of true competition.
Inefficient Default Rates: Default supply rates determined through auctions are significantly influenced by the number of competing bidders, with fewer bidders leading to higher prices for consumers.
Fraud and Misleading Practices: Deregulated markets have faced problems such as deceptive marketing, slamming, and fraud, further complicating the already complex pricing landscape.
Uncompetitive Markets: Research indicates that neither the open market nor the default service processes deliver the competitive benefits promised by deregulation, resulting in higher electricity prices for consumers.