The Grid: Electrical Infrastructure for a New Era

by Gretchen Bakke

The idea behind the act was twofold. First, it would liberalize and thus also reform (by means of the market) electricity production. This has indeed happened. There are many more kinds of fuel feeding the power plants that supply the grid today than ever before, and much of the innovation we see in power production—from the rampant adoption of rooftop solar to the new popularity of natural gas fracking—is the direct result of competition in this sector. And second, it was to make a unit of electricity into a tradable commodity with a price set by relations between supply and demand rather than by a utility’s regulatory body or by convention. This is literally what deregulation means when applied to the electric industry. In addition to the loss of regulatory support for both monopsony and monopoly powers, the prices utilities pay for and the price they charge for electricity have become far more volatile. Market forces now matter to the utilities.