Historically in America, we haven’t liked monopolies very much. In the late 1800s and early 1900s, Congress passed the Sherman Antitrust Act and the Clayton Antitrust Act to bar monopolies in the United States. Those laws still exist today. In fact, last week the Federal Trade Commission and 48 state attorneys general sued Facebook alleging antitrust violations under these acts.
So, what’s the big deal? Why do we care so much about monopolies – and why has the U.S. done so much for more than a century to keep them out of our country?
Well, the big deal is that monopolies are toxic. They are toxic to consumers, they are toxic to the economy, and they are toxic to free markets. But to understand why, we need to dive deeper, to look at what a monopoly really is.
Broadly, monopolies are single companies in a market that operate to the exclusion of others. When a monopoly exists, they have no (or practically no) competition. The monopolist can charge any price they want, and we as consumers have to take it. They can supply inferior products, and we have to buy them. They can fail to innovate for decades, and there is nothing we can do about it. All of these issues are toxic for consumers and toxic for the economy. It’s easy to see why America isn’t a big fan.
Yet, despite this country’s distaste for and laws against these toxic practices, we still allow monopolies in an essential industry: electricity. Think about your electric provider. In most states, consumers have no (or virtually no) choice regarding who we buy electricity from. We can either find ways to produce power ourselves, or we buy from our utility. That’s because state governments have drawn geographic regions and given electric utilities the right to supply service to everyone in that area.
How is this legal? Well, state governments allow monopolies in the electricity context. And courts have found that this is legal. In order to make this legal and “okay,” states have established commissions and boards that regulate the type, quality, and price of services that these monopolies offer. This is supposed to protect customers from all the toxic effects of utilities. But let’s face it. No government process is perfect. And so, while these bodies are set up to eliminate (or at least quell) the toxic effects of these monopolies, there is only so much that can be done. A monopoly is going to monopolize. And they are going to keep doing it over, and over, and over again. No matter how toxic the effects.
So, whether you’re a household consumer or an enormous electricity user spending hundreds of millions of dollars on electricity every year, you largely have no choice when it comes to who provides you electricity, or how much you pay. You are a captive customer. And, in some places, utilities even argue you shouldn’t be able to produce your own electricity on site – or hire someone to do it for you.
That is why One Energy, and companies like it, are revolutionizing the electric industry. One Energy gives consumers the ability to generate their own electricity, and helps them understand what they can do to minimize costs and break free from being a captive customer. We are the antidote to the toxic monopoly. That mission is what drives One Energy every day.
Katie Treadway is the Head of Regulatory Affairs at One Energy.