Economic Regulation-The Lights Are Still On: A View from the Inside

By Haar, Burl | Journal of Economic Issues, June 2008 | Go to article overview

Economic Regulation-The Lights Are Still On: A View from the Inside


Haar, Burl, Journal of Economic Issues


In 2006, state utility regulators gathered, as they had regularly since 1995, at a Commissioners' Summit to discuss strategic issues. Several important issues were high-lighted. However, for the first time, defining the public interest was identified as a major challenge. Participants expressed confusion about knowing who the public is, and therefore, whose interests they are supposed to protect; and, frustration that everyone that comes before them lays claim to the public interest, even though positions are often diametrically opposed (National Regulatory Research Institute (NRRI) 2006). Although public interest regulation has had identity issues since its inception, this confusion is noteworthy because it deals with the raison d'etre of the institution at a time of great change. The following observations are directed at the sources of this confusion and hopefully provide guidance going forward.

The Public Interest Concept

The concept of public interest is grounded in English common law and carried over to U. S. Court decisions. (1) These rulings held that certain industries, because of their essential nature and the presence of market power, should not be left to the unregulated market. Critical service industries involving significant economies of scale and a direct physical connection to end-users were included in this category. Given the market power inherent in these industry characteristics and their tendency to lapse into unstable oligopoly, regulations governing entry, prices and conditions of entry were established to protect the public interest (Kahn 1970).

In practice, public interest regulation has been an evolving concept. Courts deliberately crafted the concept to allow flexible interpretations and to withstand changing conditions. This need for stability and adaptability also shaped the institution charged with safeguarding the standard, i.e., commission public interest regulation, which has proved remarkably adaptable (2) (Jones 2006). However, the issue for regulators has always been whether these adaptations do, in fact, protect and promote the public interest (Gorak 2002). The concern expressed at the 2006 Summit suggests this quest has become more challenging.

Why this Confusion Now?

Summit participants offered clues about the nature of this strategic issue. The overriding factors identified were a) the pace of technology change; b) difficulty in balancing often competing policy goals, particularly, the need to promote competition while keeping rates affordable and providers financially viable; and c) how to weigh parties' perspectives (NRRI 2006).

Technological Change

More than just the general onslaught of technological change, which became very pronounced in the "Technology Revolution" of the 1990s, the convergence of technologies has blurred the line between regulated and unregulated services (Link 2002). The "triple play" in communications involves the blending of voice, data and video services over one network. Broad regional grid control through regional transmission organizations (RTOs) treats generation, transmission, and (soon) demand response essentially as substitutes, and has transformed electrical services into a wholesale commodity, to be bought and sold over regional markets.

These major convergences have blurred the lines of state commission authority even while the public still holds regulators responsible for service quality and prices (3) (NRRI 2006).

Political Changes

The 1990s also brought intensified partisanship in politics. Partisan politics has permeated our culture, from popular media to religion, and has accelerated the emergence of diverse activist groups who are fueling and funding the policy debates (Hartmann 2006). This trend has lead to a proliferation of special interest groups in commission proceedings and has prompted the political bodies of government to overshadow the traditional realm of regulators. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Economic Regulation-The Lights Are Still On: A View from the Inside
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.