chapter  8
25 Pages

Is network reliability a public good?

The preceding chapters have illuminated several aspects of electricity policy in which the combination of technological change and economic dynamism have made existing policy ineffectual, irrelevant, or counterproductive. Such changes make it important to challenge the fundamental assumptions on which these regulatory institutions rest. This chapter explores one such assumption: in network industries like electric power, the assumption the interconnectedness of agents means that all agents necessarily experience the same quality of service (such as, for example, reliability) on the network. In particular, the AC electric power network is physically constructed such that all agents on the network experience the same voltage and frequency conditions. This powerful assumption undergirds much of the centralized physical control paradigm.