Why Regulate Electricity? Two Exchanges (Giberson, Borlick)

By Robert Bradley Jr. -- June 3, 2025

The intellectual and practical case for separating government and electricity is strong. The historical record offers little support for “market failure”–quite the opposite. The laws of physics do not preclude private ownership and control of assets in this area unless you assume mandatory open access–Lynne Kiesling’s Ostrom trick–to make private operation of control areas problematic. [1]

So I labor against faux classical liberals/think tanks that offer suggestion after suggestion to try to make government planned ISO/RTO’s work. But the fix is in with the guilty who refuse to seriously consider a free market in electricity.

Two exchanges with my critics follow. One is with Michael Giberson, a “Right” central planner; the other with Robert Borlick, a Progressive Left central planner.

Michael Giberson Exchange

Giberson posted on his regulatory filing:

The DOJ Anticompetitive Regulations Task Force requested comments on how state and federal regulations act to impair competition. In R Street’s comments we describe how regulations granting monopoly rights to electric utilities can be abused to raise rates and slow innovation. We advocate deep reconsideration of the grounds for state-protection of monopoly in the electric power industry, and using that reconsideration to restrict monopoly grants to the degree supportable by evidence and then quarantining the monopoly to allow competition to flourish in other industry sectors.

He continues:

Much of the regulatory framework governing the electric power industry in the United States remains founded on thinking that is now over a century old. It might [not?] be the case that the old ways still work best for consumers. Plenty of evidence–ranging from peer-reviewed economic analysis to legal decisions to news reports–suggest that monopoly electric utilities use their protections in ways harmful to the public interest. We discuss this evidence and offer recommendations for reform.

I asked: “Any discussion in the paper on eliminating both public utility regulation and mandatory open access to introduce a real free market in electricity? Repealing the Federal Power Act of 1935, as well as the Green New Deal subsidies to wind, solar, batteries, etc.?”

Giberson: “We recommend the DOJ’s task force take a fresh look at justifications for granting state-protected monopoly and work to eliminate any state grants of monopoly power found lacking in justification. Not quite “burn it all down,” but offering them reason to do some serious “controlled burns.”

Bradley: “How far away are we from teeing up a real free market in electricity in addition to the ‘controlled burns’? Just as an alternative. Is there a reason why without public utility regulation (franchise protection), integrated electricity firms cannot manage control areas and guarantee reliability for blocks of consumers? And consumer blocks be organized by representatives to negotiate rates and other terms of service?”

Giberson: “Your suggestion seems like one possible arrangement in the absence of a monopoly franchise.”

Bradley: “The free-market alternative should not be anathema to ‘a think tank whose work is grounded in liberty and freedom.’ How long at R Street can the dance with central planning and renewables last?”

Final Comment

And he disappeared, as usual….

There can be no straight answer. R Street and Michael Giberson are wed to electricity statism in the centrally planned ISO/RTO market. They do not offer a North Start of a real free market in electricity in the face of withering criticism that free markets never failed in this huge sector. Note that Giberson’s extensive footnotes do not mention my electricity piece, which he refuses to try to refute, much less acknowledge. Oh well, the future will be kinder to me than to him, as is the case for many areas of statism versus free markets.

Robert Borlick Exchange

The exchange began with Borlick’s social media post:

Why should the general public subsidize Big Tech’s need for electric power? These companies are largely owned by billionaire oligarchs. We don’t need more welfare for corporations. Big Tech should provide for their own power needs.

He referred to an article “Big tech must stop passing the cost of its spiking energy needs onto the public.”

I commented: “An end to public utility regulation could address this.”

Borlick: “Rob, you keep saying this without addressing how to control the market power of natural monopoly. If utilities faced competition there would be little need for price regulation. When small scale generation gets cheap enough to make self generation economically feasible, utility regulation will no longer be needed, nor will it be capable of even ensuring cost recovery for the utilities. I submit that day is not far off.”

Bradley: “My argument has long been (and it is in the paper I have shared with you) that 1) the natural monopoly theory is missing in action, as in the pre-PUR of the industry and 2) a ‘monopolist’ utility rate can be countered by monopsony, organized consumers via lawyers/experts. Low transaction costs make the latter possible, and civil society (public opinion, media, etc.) will no doubt be part of the process, if it were to get to that.

But can you or anyone else provide a clear example of a natural monopoly doing bad things in a free market setting (w/o franchise protection)?

Third, as Pigou stated in 1920, ‘It is not sufficient to contrast the imperfect adjustments of unfettered private enterprise with the best adjustment that economists in their studies can imagine. For we cannot expect that any State authority will attain, or will even whole-heartedly seek, that ideal’ (1920, 296).”

Bradley: “Regarding off-grid distributed generation, central station thermal with transmission and end users exhibits scale economies–and in all three areas. Insull first discovered this, and it has not changed despite all the government intervention to penalize vertical/horizontal integration and to subsidize dilute, intermittent inferiors….”

Final Comment

And Borlick disappeared….

[1] Kiesling uses the mandatory open access trick to argue:

I don’t know that we need to reopen the utility regulation debate. I strongly think we need to reframe it in Ostromian terms. Yes, electric networks require central physical control, but 1. there are different institutional ways of implementing that and 2. the more we think of grid management and physical control as Ostrom-eqsue institutions for defining and enforcing use rights in a common-pool resource, the better a job we’ll do of allowing a resilient, decentralized, heterogenous network of resources to emerge through innovation.

Wrong! The regulatory approach has been, is, and will be a case study of technocratic second-best, at best.

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