The PowerPlus Utility Company recently built a nuclear power plant in a southern state and started competing against Electricity City Utility Company that has served customers in that region for 65 years. Due to deregulation, consumers now have a choice among utility companies in this area. Although PowerPlus has made a sizeable capital investment, if it successfully grows market share, eventually prices for electricity may stabilize or fall.

Question

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New legislation has ended the monopoly status of utilities in some areas of the U.S., permitting new competitors to seek customers in regions where they could not operate in the past. The purpose of deregulation is to increase competition among these utility companies, and to eventually lower prices for consumers.

The PowerPlus Utility Company Recently Built a Nuclear Power Plant