The distribution grid for delivering electricity to the user has been paid for as part of the charge per kilowatt-hour that covers the cost of the energy itself. Conservation advocates have promoted the adoption of policies that “decouple” electric distribution company revenues or profits from how much electricity goes through the lines. Their motivation is that usage-based pricing leads utilities to encourage use and discourages conservation. Because decoupling divorces profits from conduct, it runs against the dominant finding in regulatory economics in the last twenty years – that incentive-based regulation outperforms rate-of-return. Even if distribution costs are independent of use, some usage charges can be efficient. Price-cap regulation may distort utility incentives to inform consumers about energy efficiency – getting more performance from less electricity. Utilities will subsidize efficiency investments, but only when prices are too low. Justifying policies to subsidize energy efficiency requires either prices that are too low or consumers who are ignorant.
Research Papers
Research Papers
The End or the Means? The Pursuit of Competition in Regulated Telecommunications Markets
Economic analysis takes as its defining performance benchmark the pursuit of increases in welfare (efficiency). Competition is merely one of a variety of means of achieving the efficiency end, especially in industries where the underlying economic circumstances predispose them towards greatest efficiency when competition (in the form of many market participants) is restricted. Typically, regulatory intervention in these industries is justified by the imperative to increase efficiency. Competition law and industry-specific regulation provide two competing means of intervention whereby the pursuit of efficiency can be enhanced. The challenge is in determining how to allocate responsibility for governance of industry interaction between these two institutional forms. Whilst competition law can govern interaction in most industries, where the underlying economic conditions are sufficiently different, industry-specific regulation offers advantages. However, its weakness is the risk of capture, leading to the subjugation of the efficiency end to the pursuit of other objectives (e.g. competition – the means – as an end in itself). But if the regulatory institution could be bound in some way to pursue an efficiency objective, could the risk of capture be averted?
Research Papers
A Comparison of the Technology Policies of Barack Obama and John McCain
This comparison is drawn from and adheres closely to statements on the presidential candidates? websites.1 Both websites list technology among the issues most important to their campaigns. The comparison summarizes the candidates? views on key issues and highlights important similarities and differences.
Research Papers
Evaluating the Effects of Wholesale Electricity Restructuring
Electric power is one of the last major regulated industries to undergo some form of ?liberalization.? One of the most important steps has been creating regional transmission organizations (RTOs) in major regions of the country. RTOs are independent non-profit entities that operate utility-owned transmission networks. They are intended to increase competition and efficiency in the market for wholesale power, which should lead to lower wholesale prices. This paper tests whether RTOs have, in fact, achieved this goal.
Research Papers
DTV coupon program mainly benefits retailers, not consumers
TPI vice president for research and senior fellow Scott Wallsten finds that the government’s DTV coupon program has increased the price of digital-to-analog converter boxes by $21-$34, meaning that the subsidy is primarily benefiting retailers rather than consumers. The $40 coupons made available to all households means that consumers pay $0 for any retail price less than $40 for eligible boxes, thus diminishing price competition among retailers.
Research Papers
Reverse Auctions and Universal Telecommunications Service: Lessons from Global Experience
The United States now spends around $7 billion on universal service programs?subsidies intended to ensure that the entire country has access to telecommunications services. Most of this money supports telecommunications service in ?high cost? (primarily rural) areas, and the High Cost fund is growing quickly. In response to this growth, policymakers are considering using reverse auctions, or bids for the minimum subsidy, as a way to reduce expenditures. While the U.S. has not yet distributed funds for universal service programs using reverse auctions, the method has been used widely.
Research Papers
Comments to the Federal Communications Commission – Antitrust, Two-Sided Markets, and Platform Competition: The Case of the XM-Sirius Merger
Wallsten, Scott. “Comments to the Federal Communications Commission – Antitrust, Two-Sided Markets, and Platform Competition: The Case of the XM-Sirius Merger.” July 2007.