How deregulation made electricity more expensive, not cheaper
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
American families are feeling the pinch of rising electricity prices. In the past five years alone, the generation portion of the standard service residential electric bill in Columbus, Ohio, has increased by 110%. This is one data point in a national trend.
Energy affordability is quickly shaping up to be a key election issue at all levels of American politics. And more than half of U.S. adults surveyed in January 2026 reported being very concerned about the price of electricity.
Experts in the energy industry are fiercely conflicted on what, or who, is to blame. People have sought to blame geopolitical events like the war in Ukraine, dramatic changes in U.S. energy policies, power grid operators, regulators and artificial intelligence and data centers.
But new research from The Ohio State University’s Energy Markets and Policy Group, where I serve as principal investigator, provides new insights about another factor you were probably not thinking about – middlemen introduced by deregulation.
How deregulation brought middlemen instead of competition
Between the late 1990s and early 2000s, several state legislatures deregulated their electricity systems. Deregulation was originally sold as a way to replace inefficient regulation and reduce bureaucracy. People were told that competition would deliver lower prices.
Under the old system, a state regulatory commission set prices for all electricity services – generation, transmission and distribution – which were supplied by the same monopoly utility company. Each state commission was required by federal law to ensure that rates were “just and reasonable.” Under deregulation, that same commission rate-setting process still holds for transmission and distribution, but the generation part was split off.
Deregulation created competitive wholesale markets for generation, but price competition did not spread widely at the retail level. In states with active retail deregulation, there are two…
