Lawrence Berkeley National Laboratory

The price volatility exhibited by wholesale electricity markets has stymied the movement to restructure the industry, and may derail it altogether. Market designers argue that prices are superior to regulation for directing long-term investments to the proper location and function, and that price volatility is a natural manifestation of a robustly competitive market. However, episodes of prices that soar to previously unimaginable heights try customers' patience and cause policy makers to reconsider if the prize is worth the consequences.