The choice of whether to let firms compete or regulate them is key issue in economics. If the demand is sufficiently inelastic, competition entails narrower allocative distortions but also smaller expected profits and, thus, weaker incentives to invest in cost-reduction than regulation does. Thus, society's preferences for competition are stronger the less socially relevant cost-reduction is and the greater the political power of consumers is. This prediction is consistent with U.S. power market data. During the 1990s, deregulation was implemented where marginal fuel costs and the inefficiency of fuel input usage had been the lowest and where politicians were the most pro-consumer. In addition, GMM estimates imply that deregulation significantly reduced labor and fuel expenses by pushing the most efficient firms to serve the market, but did not improve technical --- and in particular fuel input usage --- efficiency. My results shed new light on the slowdown of the deregulation wave and survive to the consideration of the other drivers of deregulation identified by the extant literature, i.e., costly long-term wholesale contracts and excessive capacity accumulation.