Quarantining Electric Utilities

Despite state and federal efforts to restructure wholesale power markets, regulated utilities continue to own generation, transmission, and distribution affiliates. This Article describes challenges vertical integration creates in different electricity markets and analyzes these problems using literatures in both economics and law. It argues that policymakers should quarantine rate regulated utilities to reduce utility incentives to self-deal and otherwise direct investment away from socially beneficial grid infrastructure. JEL Classification: K21, Antitrust Law; K23, Regulated Industries and Administrative Law; L43, Legal Monopolies and Regulation or Deregulation; L51, Economics of Regulation; L94, Electric Utilities