A panel of experts discussed regulating energy markets at a conference convened on the occasion of the 25th anniversary of the Mossavar-Rahmani Center for Business & Government.  The four panelists discussed issues at the forefront of energy market regulation, including market liberalization, changes in the US energy market, global climate change and the role of government in incentivizing efficient technology and regulation.

Jorge Segrelles, of the Repsol YPF Fundacion, opened the discussion by outlining the three objectives of European Union (EU) energy policy: (1) competitiveness, (2) maintaining the security of supply, and (3) tackling climate change.  He remarked that the process of developing real competitive markets is far from complete, as market fragmentation continues to exist.  He further noted that because nations may lose political control over subsidies and prices affecting inflation and national growth, governments may be resistant to energy liberalization. 

Elizabeth (Betsy) Moler of Exelon Corporation cited the “interplay between rising energy prices and climate change” as one of the biggest challenges for the next generation.  Moler also called for greater investment in generating technology, as the need for new infrastructure will increase exponentially in the coming years.  With regard to the U.S. domestic market, she noted that while competition seems to be thriving in the case of big industrial consumers, it is not necessarily making the same inroads in residential areas.  Currently, 18 US states have adopted some sort of retail choice in the electricity sector.

The Kennedy School’s Erich Muehlegger discussed how consumers respond to changing energy prices.  Muehlegger stated “we know if incentives are structured properly, firms will respond quickly,” but that it is unknown if consumers will respond similarly.  He focused on short and long term governmental responses to pricing, concluding that government seems to only play a small role (if at all) in affecting short term demands, but that it could probably influence longer-term demands for energy efficient technology, which can affect pricing.  Muehlegger also sees a role for the federal government to attempt to harmonize state governments’ energy regulations, noting the recent large increase in supplementary state regulation, creating substantial inefficiencies.

- Shyamal Misra
MPP Student Rapporteur