Electricity Generation: The Hypocrisy of the Biden Administration

The Biden administration promotes competitiveness. President Joe Biden stated, “capitalism without competition is not capitalism, but exploitation.”

Besides, supporting stronger economic rivalry has become an integral aspect of the administration’s anti-inflation message.

The government even set up a White House Competition Council and passed 72 pro-competition economic measures in the past year. In one area, however, the administration’s silence remains leering: electricity.

Electricity Competition

While 14 states permit consumers to pick their retail power supplier, the majority of U.S. citizens are limited to their local incumbent electric company.

The majority of these utilities also operate their own power plants, which restricts competition in the electric generation market.

Moreover, a number of states have lately enacted legislation that restricts competitive bidding for electric power transmission facilities.

Those aspects of monopolies that the Biden administration claims to dislike also apply to power monopolies. Monopolies hike prices for customers. In recent years, states that offer retail energy choices have often experienced a decline in electricity rates.

Similarly, monopolies impede innovation and hinder customers’ access to renewable sources. States that are more competitive in electric power have adopted new sustainability plans with lower emissions more quickly.

Admittedly, there is one significant distinction between so-called monopolies the Biden administration wishes to target and electric utilities. Where electricity companies are monopolies, it is because the government forbids competition from other organizations.

Many parts of the utility’s business (such as the prices they charge) must be approved by state regulators, due to the utility’s position as a regulated monopoly.

However, this regulatory control is not as protective as one might believe.

It is uncommon for public utility commissions to deny utilities’ expense requests. Utilities frequently receive an additional profit percentage, which can be as high as 10% of costs, in addition to recovering their expenses.

Unlike most firms, utilities generate more profits as their expenditures increase. Despite regulation, most consumers are supplied by for-profit utilities.

This indicates the government protects these for-profit utilities from competitors and customer choice.

Build Back Better

The Biden presidency has sought to strengthen utility power.

A portion of the administration’s Build Back Better plan, for instance, would have provided billions to electric utilities to stimulate the construction of more renewable production.

This would unintentionally squeeze out private adoption of renewable energy alternatives to government-regulated enterprises.

If the Biden administration is genuine about the value of competition, further bolstering some of the nation’s most powerful monopolies is a strange way to demonstrate this.

There are steps it can take if it wishes to pursue a pro-competition agenda for the electrical sector.

To begin with, the government might mandate competitive bidding for new multistate transmission projects or projects that would be funded by the citizens of several states.

There is no justification for a state’s inhabitants to pay more for power because of the protectionist practices of other governments.

In addition, the Department of Energy might offer technical help to states that choose to join structured wholesale markets.

Also, the Biden administration and Congress should pass laws that require free competition for new projects that generate electricity for interstate systems.

These minor efforts might demonstrate the Biden administration’s devotion to competition.