Question

Differentiate between a Regulated and a De-regulated Electricity Markets

Answer 1

Regulated & Deregulated Electricity Markets
According to the policy of different states there are regulated and deregulated electricity markets. Most of the states have regulated model of electricity market which has only utility company to provide electricity. The company may own the entire infrastructure and the transmission lines by their own. In the deregulated electricity market, the entrance is open to any market participant to invest, produce and supply electricity their own. The infrastructure is owned by different firms rather from the regulated market.
Regulated market is basically a type of monopoly with only one company participating in production and supply of electricity. They may be owned by public or even private. Where the market is regulated, there will be a public utility commission to fix the price for electricity that a consumer uses. So, even it is a monopoly, the consumers can enjoy a constant level of pricing over electricity over a period of time, which is probably in favor of the consumers. The monopoly market lacks the ability of the consumer to choose over their producer or firm. Owning the entire infrastructure the company will be able to produce and supply at less price.
Deregulated markets allow the entrance of market participants leading to a healthy competition between the producers that may benefit the customers. The retail electricity suppliers can fix their price and the consumer has their right to choose over the firm. Since the firms face competition from the market itself, they will try to price the least for the commodity thus attracting more customers. Competition also helps in new innovations and energy efficiency leading to a better market experience for both consumers and producers.