Public Management of Deregulated Systems: Challenges and Opportunities in the Public Management of Retail Energy Markets

Many critical infrastructure services operate within quasi-regulated (i.e., “deregulated”) markets. Public managers face a unique set of challenges and opportunities in the administration and oversight of these markets. Administrative and regulatory challenges exist because public managers are required to balance an open and competitive marketplace while confronting multiple market failures (e.g., consumer inattention, imperfect competition) alongside organizational, management, and legal and regulatory enforcement challenges. There are real-world consequences of administrative choices on economic (in)efficiency and consumer equity. This paper provides public managers with a comprehensive review of the public management challenges and opportunities associated with managing deregulated retail electricity markets. It then provides a review of empirical research and an empirical example for one category of these challenges—consumer equity. The paper concludes with a multi-disciplinary discussion of the role of public managers in deregulated marketplaces and public policy options to address both equity and efficiency challenges.