(Bloomberg) -- Electricity deregulation doesn't make U.S. grids more resilient and complicates the transition to cleaner generation sources, Southern Co. Chief Executive Officer Tom Fanning said.
Competitive markets put focus on short-term costs and discourage long-term planning, especially if rules change every year, Fanning said in an interview Thursday. He cited California and Texas, which have endured blackouts in the past year amid supply shortfalls, as examples of why deregulation doesn't deliver on its promises.
“The so-called organized markets are a failure, they are not serving resilience that the American economy needs,” said Fanning, who has led the Atlanta-based utility serving 9 million customers for a decade. “If anybody could, they would put the toothpaste back in the tube.”
His comments are a rebuke to calls by Joe Biden's Federal Energy Regulatory Commission appointees, who back more competition in power markets to help speed the transition to greener power sources. Still, Fanning said Southern is working with the administration to accelerate its net-zero greenhouse-gas emissions target to as early as 2035 from a prior objective of 2050.
Regulation gives utilities more control and long-term demand insight, allowing them to invest in plants to meet forecast needs. Deregulation brings competition for supply, and forward markets can mean prices for different power sources rise or fall each year. That makes it harder to arrange natural gas, coal or nuclear generation to back up renewables such as wind and solar that aren't consistently available.
Southern and some other utilities that regulators grant monopoly status for their power plants and transmission lines have been criticized for building expensive projects that raise ratepayer costs and pad corporate profits.
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