wind and solar “farms” producing electricity and selling it into the grid.
These technological changes have led to the realization that the
generation of electricity is no longer a natural monopoly even though the
distribution of electricity still is. This realization led several jurisdictions
in Canada and the United States to embark on a path of privatization or
deregulation of electricity markets.
The rapid development and reduction in the prices of solar panels have
contributed to a significant change in the electricity industry. The
production of electricity is no longer the natural monopoly it once was.
Thongsuk Atiwannakul/Shutterstock
Problems with Regulations
Many practical problems arise with regulations designed to prevent
natural monopolies from charging profit-maximizing prices. These
problems begin with the fact that regulators usually do not have enough
data to determine demand and cost curves precisely and thus they would