AMHERST, Mass. - Deregulation of electric utilities isn’t likely to create significantly lower costs and better service for most consumers, because the level of industry competition promised by backers of the plan may take years to develop, says William G. Shepherd, professor of economics at the University of Massachusetts. What deregulation will mean, however, is more anxiety for ordinary consumers, Shepherd says.
Speaking about deregulation of the telecommunications and electric utility industries, Shepherd says, "There’s too much glib optimism that competition will be coming soon and strong in these sectors. Instead, the prospects are pretty dim, especially for local telephone-service and local (retail) electricity competition. The public may get stuck with powerful near-monopolies, which could be free from any protection for the public."
"Long-distance telephone competition has taken over 15 years to develop toward being genuinely effective. AT&T still dominates much of that industry, both nationally and in many states," Shepherd says. "As for electricity competition, many utilities have been cutting sweetheart deals with their best business customers. The result: new competitors will often find that all the best prospects are already locked up."
Shepherd also says there are some technical tactics being used to prevent competition, and they are written into Massachusetts’s new utility deregulation law.
Shepherd is a frequent witness and commentator on antitrust and regulatory cases involving a wide range of industries. In the past 18 months he has testified before state officials in Massachusetts, New Hampshire, Rhode Island, New York, Arkansas, Louisiana, Montana, and Illinois, and at a federal hearing in Canada. Shepherd specializes in defining markets, assessing the degree of competition within industries, and evaluating possible anti-competitive actions. He is general editor of the Review of Industrial Organization, a research and policy journal on the issues of competition and monopoly.