Don't throw out energy deregulation after Enron

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The bankruptcy of Enron, a firm that will forever be linked to the glowing promises associated with deregulating electricity supplies, casts a long shadow. Already in Asia, where Enron's gusto about free markets mesmerized many, a backlash has developed. Efforts to introduce a dose of healthy competition in energy supply are ebbing. Staid old government agencies plodding forth in a business-as-usual and polluting fashion may still dominate.

Many consumer and environmental activists interpret the fate of Enron as damning evidence that an open market cannot deliver a product whose impact on our gadget-filled lives will only increase over time.

There is a better way. What the world needs is an honest and enlightened approach to restructuring power markets that allows for small, innovative firms pushing clean-power technologies to blossom. Local as well as global impacts of electricity generation also need to figure prominently in planning a more sustainable energy future.

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The key is to empower consumers, both large and small. They can participate more directly in power markets by having access to new technologies that can drastically reduce consumption and generate nonpolluting power from free, unlimited fuels, such as the sun and wind.

A sole focus on increasing power supply would be a mistake. Energy efficiency needs to be taken out of the hands of bureaucrats and given to entrepreneurs who have bright ideas about how to do more with less. The main failure of so-called "deregulated" energy markets in the past is that practically all of the attention has been placed on the supply side. Very little brainpower has been applied to reducing demand in a system where none of the major market players - except consumers - has any incentive to conserve.

The World Energy Council projects that by 2020, the developing world (notably Latin America, Asia, and China), will consume more energy than the industrialized world. Some $4 trillion will be required to build the power infrastructures needed to serve the newly electrified. If we follow the business-as-usual fossil-fuel and nuclear-power path, we are doomed.

The trick is to create a system where smaller niche players, such as purveyors of solar and other renewable technologies, can play a major role in delivering energy services to consumers. This can only happen in a widespread manner with some form of deregulation.

The answers to our energy challenges really do lie in our own backyards.

We, too, can become power producers, whether by installing our own generators or reducing consumption. In so doing, we consumer/producers can take some responsibility for our electricity addiction, and help create an energy democracy that moves toward sustainability for future generations.

• Peter Asmus is author of 'Reaping The Wind: How Mechanical Wizards, Visionaries and Profiteers Helped Shape Our Energy Future' and 'Reinventing Electric Utilities: Competition, Citizen Action and Clean Power' (Island Press).

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