“What is underemphasized or missing in the working paper is consideration of real-world competition as the industry understands it. In other words, rate discounting, surplus capacity, new entry and bypass, alternative fuel competition, and other factors make markets very competitive whatever the market shares of its individual participants.”

“[FERC] never considers the imperfections of regulation itself. It is assumed that regulation is a costless alternative to correct imperfect pipeline markets.”

In a previous life, I worked for an interstate gas transmission company that was rate- and service-regulated by the Federal Energy Regulatory Commission (FERC). During this time, I tried to make a case for deregulation where both entry/exit and rates would not be regulated under cost-based public utility regulation.

Following neoclassical economics, FERC did not consider interstate pipelines “workably competitive.” Using a technical approach instead of a common-sense, real world approach, FERC could not see what those in the business saw on a day-to-day basis: that the pipeline business was very competitive, and discounts from maximum rates proved so.…