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Deregulating the Power Industry

States' Plans to Deregulate Get 2nd Look
May 2, 2001

Fearful of the blackouts and price spikes that have afflicted California, most other states expect to slow or even halt efforts to deregulate their electricity markets, according to a survey of utility regulators that is to be released late this week.

Critics Say U.S. Energy Agency Is Weak in Oversight of Utilities
March 23, 2001

The FERC has largely soft-pedaled its role as the electricity industry's top cop, even though it has wide authority to keep power companies in line.

Plan on California Energy Has No Shortage of Critics
April 27, 2001

A novel plan by federal regulators to control California's runaway electricity prices is a messy, politically motivated compromise that may offer some relief to consumers but will do little to fix the state's dysfunctional energy market, analysts said.

The idea behind deregulation is that competition -- in any industry -- will drive down prices and create a more efficient market. After deregulation of the electricity market was implemented in California, rates did fall briefly, but have since spiraled higher than ever before, sparking a renewed debate over the application of free market principles to the power industry. This debate echoes those heard during the deregulation of the natural gas, telecommunications, and airline industries. Here's a primer on the ideology behind deregulation, and an overview of the arguments of opponents who say that some commodities are too precious to be left to the open market.
The Deregulation Debate
Some advocates have called electricity the "oxygen of industrial society." Should such a vital commodity be subject to the open market? Or will a deregulated market gouge consumers? Here are the views of Enron Chairman Ken Lay; consumer advocate Nettie Hoge; FERC Chairman Curt Hebert; California's chief regulator, Loretta Lynch; FERC Commissioner Pat Wood; business professor Severin Borenstein; U.S. Vice President Dick Cheney; David Freeman, energy advisor to Gov. Gray Davis; Robert Glynn, CEO of PG&E Corp.; Enron CEO Jeff Skilling; FERC economist Ron Rattey; and Stanford economics professor Frank Wolak.
Deregulation in Your State
The Department of Energy offers an interactive map detailing the status of electric industry restructuring in each state.
What is FERC?
Established in 1977, the Federal Energy Regulatory Commission controls the country's natural gas industry, hydroelectric projects, electric utilities, and oil pipelines and has played a critical role in the deregulation of these industries. Here's an explanation of the origins of the agency, what it does, and its role in the California crisis.
Public vs. Private Power: from FDR to Today

The accusations of "market manipulation" hurled at many of today's power companies echo the criticisms made in the 1920s by FDR, who made reining in the power monopolies an integral part of his New Deal. Here's an overview tracing the rise and fall of state and federal intervention in the U.S. electricity industry.

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