Electric Utilities’ ‘Death Spiral’: Hyperbole or Reality?

The context may have changed, but the notion of a death spiral refuses to die: these authors wrote about it 27 years ago. However, the current Cassandras may be overstating the severity of the problem and underestimating the policy options open to utilities and regulators to reverse a temporary unstable situation. Their predictions seem rigidly grounded on tacit assumptions that utilities are inert in responding to a more competitive environment. It is more likely utilities will work with their regulators to avoid serious financial problems while promoting efficient competition that serves the public interest.