Regional systems, increased competition, and environmental imperatives are forcing a reallocation of state and federal regulatory responsibilities for the US electric power sector. The great extent of regional diversity in the sector raises a policy relevant empirical question. Is this diversity due to choice or circumstance? This paper finds circumstance to be a more significant determinant of fundamental performance than choice, but also finds evidence that decisions at the margin reflect the diverse preferences of regional policies. This suggests a continued role for (more responsive) state level regulation in order to satisfy diverse preferences. Uncertainty about the optimal endpoint of restructuring reinforces the value of continued [...]
