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Strengths and Weaknesses of Traditional Arrangements for Electricity Supply

Richard Schmalensee

October 2019

This essay provides a broad-brush comparison of performance under traditional arrangements for electricity supply with those that emerged after the world-wide wave of restructuring that began in the 1990s. It focuses on the change in reliance on market competition and emphasizes comparisons within the U.S., where traditional and restructured arrangements both exist. It considers both the historical regime, in which essentially all generation capacity is dispatchable, and, more briefly, the emerging regime in which wind and solar generation play important roles. This essay was written to become Chapter 2 in Handbook on the Economics of Electricity (J.M. Glachant, P.L. Joskow, and M. Pollitt, eds.) to be published by Edward Elgar.

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