Monopolies (and Electricity)

Illustration by Avery Adamson

A monopoly is a business that totally controls its market, because it has no competition and therefore customers have no other options.

Game Over For Electric Utilities?

In the board game ‘Monopoly,’ the ‘monopolies’ are real estate and railroads. When the game was developed, railroads were monopolies (they owned the only set of tracks) and real estate in some cities had been totally monopolized by a few tycoons.

Anyone who wanted to ride the railroad or rent a storefront in those cities had to deal with those ‘monopolists’ and pay their prices.

Today there are far fewer monopolies, because there’s so much competition for almost everything, including transportation. Many competing sets of train tracks have been laid, not mention the proliferation of cars, trucks and airplanes.

But one service is still a monopoly almost everywhere: electricity.

Electric utilities are monopolies because they own a physical bottleneck – it’s not feasible to string more than one set of power lines down each street and to each house or business.

So if you want to run your fridge or to charge your devices, you must buy from the ‘monopoly’ utility. And you must pay their prices and agree to their terms (though they’re usually regulated).

Is electricity the last ‘monopoly?’ Maybe – but it may not be a monopoly for long. Solar panels and battery storage are making it increasingly possible for buildings to achieve energy independence and not need the monopoly utility at all (or at least not as much).

The electricity monopoly may break down the same way AT&T’s phone service monopoly did – because technology creates alternative ways to fill the need without going over their single set of wires.

This would be great for the planet and the free market: giving people the choice of where to buy electricity from, both cheaper and cleaner.