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Regulated vs Deregulated
What are the key differences between regulated and deregulated energy markets?
Solution
- In regulated markets, a single entity, usually a government-appointed or owned utility, controls the generation, transmission, and distribution of energy. Prices are set by regulatory bodies. In contrast, deregulated markets allow for competition among multiple generators and suppliers, with prices often determined by market forces.
- Deregulation aims to increase efficiency and lower prices through competition, though it requires robust regulatory oversight to ensure fair practices.
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