Decommodifying Electricity 

Abstract

Electricity markets are struggling. Unprecedented energy price shocks, a deeply entrenched cost-of-living crisis, and the imperatives of decarbonization are challenging the ability of current market arrangements to deliver clean, affordable electricity at the scale and pace necessary to avoid widespread climate disruption. Over the last several years, mass protests around the world have put a vision of electricity as a primary social good and system of provisioning squarely on the public agenda for the first time in a generation. Regulators have responded with emergency packages of support and longer-term efforts to rethink and reform the basic design of electricity markets. In all of this, it is increasingly clear that the forty-year global experiment with neoliberal electricity has failed to deliver on even the most basic metrics and, more importantly, is no longer fit for purpose as electricity becomes the chief instrument of decarbonization for most economies around the world. This Article explains how and why electricity markets have failed and offers a series of prescriptions for where we go from here. The Article starts with a brief global history of neoliberal electricity that shows how the project of privatization and restructuring emerged and spread around the world and the consequences this entailed. It then discusses how these markets have struggled with persistent problems of market power, chronic underinvestment, high prices, and an inability to support renewable energy at scale. Finally, the Article offers some provisional thoughts on what an alternative, decommodified approach to electricity might look like as the clean energy transition accelerates, focusing specifically on the relationship between capital and infrastructure, the need for “social ratemaking” to ensure access and affordability, and the potential for a more cooperative approach to balancing the system as intermittent renewables come to dominate the supply of electricity. The Article draws on recent work in law and political economy as well as some of its precursors in legal realism and institutional economics. It also engages with a specific set of questions and concerns that have long preoccupied the fields of public utility and regulated industries law but have recently been revived and updated in the context of a new cross-sectoral approach to economic regulation known as networks, platforms, and utilities law. The key objective is to understand how law, politics, and economics have together structured distributional struggles over the design and maintenance of electricity markets and how they might be recombined in new ways to realize a vision of electricity as a key system of provisioning and vital infrastructure for the clean energy future.

Keywords: energy law, electricity markets, neoliberalism, price making, market design, climate change, clean energy, affordability, law and economics, law and political economy, public utility, rate regulation