If deregulation is so great, why are prices higher than before?

For the past three months or so, Alberta has been in a situation where electricity prices are determined by market forces not regulation. The expected benefits of deregulation have not yet materialized as high power poll prices are the norm. Comparisons between Alberta and other jurisdictions operating under a regulated market should not be made. The authors argued that Alberta must act to develop significant additional generating resources to allow the growing needs to be met. Policymakers must work toward attracting private investment in new capacity using market means. The free market process cannot be perceived to be undermined by government. The development of forward markets and a market for ancillary services should be the priority in the coming months. The authors discussed investment under regulation, touching on depreciation and inflation, and the manner in which rates are affected by new investment. The next section covered the market since deregulation, explaining how the rise in prices is a reflection of the changing market conditions, the strong fundamentals and consumer protection. Some recommendations were made and the authors concluded that overall a very attractive market has been developed for Alberta. It involves a transparent design, relevant institutions and a large volume of information on the functioning of the market. 2 tabs., 2 figs