The States that Opted Out: Politics, Power, and Exceptionalism in the Quest for Electricity Deregulation in the United States South

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This article addresses why southern U.S. states opted against joining regional electricity markets at the end of the 20th century by examining the history of deregulation in North Carolina, South Carolina, Georgia, and Florida. Although there has been considerable attention paid to outcomes in states that embraced a market model for electricity, the one-third of the country (by population) that did not has been largely ignored. Yet in 2021, states that rejected electricity markets are home to the utility serving the greatest number of customers (Duke Energy) and the utility with the greatest market value (NextEra Energy), giving the region outsized impact on the U.S. electricity system. In this article we draw on archival research and in-depth interviews with stakeholders that took part in the debate about joining markets. After using archival sources to recount the events that led to the rejection of deregulation, we utilize our interviews to illustrate three key trends: (1) how the battle lines get drawn between utilities, industrial customers, legislators, and regulators; (2) the methods used and extent to which utilities opposed deregulation in their states; and (3) the role of southern exceptionalism in shaping the deregulation debate. As southern states question anew whether a market might improve regional energy outcomes, understanding why these states originally rejected markets proves illuminating.

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Energy Research & Social Science