Banking on Energy: A Reflection on Patterns of Deregulation

Abstract

They had [ragniented service area s, reflecting regulatory polic y; frag-
menied service lilies, again a product of regulation; and stability, based on
that territorial division.
While regulation stood still, it turned out funds could be raised,
transferred and paid for by non-bank competitors. Electronic commerce
turbo charged the process. ("Independent liquidity produc ers ," as it
were , arrived on the scene .)
Goliath Trust stirred, however, breathed the fire of der egulation,
and broke the chains of regulation, both sectorial and regional. The re-
sult is the elephant mating dance we now see; the prospect is for a few
tyrannosaurs roaming the financial jungle.
Energy superficially took a different route from banking . Deregu -
lation began as a Dav id & Goliath upstart revolution; it proceeded in
Congress as a mega con sumers revolt. Consolidation thus appeared to
be the last gasp of the old order.
But what does California teach us? The stranded cost recovery
gambit ha s proved a powerful delaying barrier to change. The retail
customer market has pro ved dauntingly unfluid, pax Enron. Mean-
while, the asset purchasers have turned out to be mostly the biggest
utility "boys-next -door ." The di vested behemoths have b ecome th e
acquirers across the continent. Convergence has been fully rationalized