incremental costs, the competitive bidding experiment has stimulated further interest in retail wheeling as a mean of reducing rates.

Finally, for many dispassionate observers, the competitive bidding process has simply illustrated the wide gap between this process and a genuinely competitive generating market. If there were competition between utility and nonutility generators for retail customers, this market would no longer require regulation and, hence, market forces themselves rather than rules made up by regulators would set the terms of contracts between generators and their customers. Given the experience of the last decade, there is every reason to believe that the market would produce more efficient contracts and pricing than those produced by regulatory intervention. Moreover, it seems possible that, in the absence of regulation, a spot market for generating capacity would emerge. In this context, consumers would pay competitively-determined prices for power rather than prices anticipated by either regulators or utility buyers. Finally, the observation that many suppliers are willing and able to construct and operate generating capacity strongly reinforces the view that this market is potentially competitive.

These considerations underlie the much more radical proposals for industry reform which have been tentatively adopted in California and are under active consideration in other states as well. These proposals involve deregulation of the generating sector of the industry and the creation of an open access pool to which all generators could offer supplies of power and from which all buyers could eventually purchase power at the spot price. These reforms would also allow customers to enter into contracts for power with generators or with independent power marketers who would be financially responsible for assuring reliable supplies. While these reforms are merely under consideration and not adopted in most areas, it is important to recognize that they are, at least in part, a natural outgrowth of the much more modest reforms initiated legislatively through PURPA in 1979 and through further reforms in the Energy Policy Act undertaken in 1992. The nature of the reforms being proposed is discussed much more fully in Dr. Kahn's paper.

### 7. SUMMARY AND CONCLUSIONS

Frankly, it is quite difficult to either draw succinct conclusions or to briefly summarize this rather wide-ranging review. To be brief, however, there is clear evidence of a broad-based trend toward reform in the regulated sector of the U.S. economy. This reform is being occasioned both by market expansion and technological changes which are increasing the competitive potential in all or part of these markets. In addition, the pressure for reform is coming from artificial price-cost disparities created by the regulators. Finally, the course of regulatory reform in these industries, with the possible exception of airlines, is neither smooth nor simple. Since competition is feasible in some parts of these industries but not across the board, either industry or regulatory reform, or both, are necessary to accommodate industries which are partially served by monopolies and partially served by competitors. And these reforms must be accomplished without sacrificing the benefits historically achieved by vertical integration. The evolution of such reforms