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A Failed Experiment: Why Electricity Deregulation Did Not Work and Could Not Work

The massive national experiment in electricity deregulation—launched by over a dozen states more than a decade ago in the wake of the Reagan revolution—has failed on multiple counts. Intended to reduce electricity rates, deregulation instead increased rates. For the ten months through October 2006, average rates in deregulated states were 55 percent higher than in regulated states. Volatility has also increased, and reliability has decreased. This report explains why deregulation failed.