Reinventing Electric Utility Regulation

Learn from this collection of thought-provoking commentary on change and electric regulatory reform from executives, state regulators, and federal commissioners in the regulatory community. Plus, perspectives from other players -- the utilities governed by these regulators, the financial community (rating agencies), independent power producers, and public power.

Traditionally protected as monopolies, electric utilities are now being caught in the fervor for deregulation that is sweeping the country. Nearly forty states have enacted or are considering laws and regulations that will profoundly alter the way the electric utility industry is governed. Concerned citizens are beginning to ponder the environmental implications of such a change, and while many fear that the pressure of competition will exacerbate environmental problems, others argue that deregulation provides a tremendous opportunity for citizens to work toward promoting cleaner energy and a more sustainable way of life. In Reinventing Electric Utilities, Ed Smeloff and Peter Asmus consider the challenges for citizens and the utility industry in this new era of competition. Through an in-depth case study of the Sacramento Municipal Utility District (SMUD), a once-troubled utility that is now widely regarded as a model for energy efficiency and renewable energy development, they explore the changes that have occurred in the utility industry, and the implications of those changes for the future. The SMUD portrait is complemented by regional case studies of Portland General Electric and the Washington Public Power Supply System, the New England Electric Service, Northern States Power, the Electricity Reliability Council of Texas, and others that highlight the efforts of citizen groups and utilities to eliminate unproductive and environmentally damaging sources of power and to promote the use of new, cleaner energy technologies. The authors present and explain some of the fundamental principles that govern restructuring, while acknowledging that solutions will depend upon the unique resource needs, culture, and utility structure of each particular region. Smeloff and Asmus argue that any politically sustainable restructuring of the electric services industry must address the industry's high capital cost commitments and environmental burdens. Throughout, they make the case that with creative leadership, open and competitive markets, and the active participation of citizens, this upheaval offers a unique opportunity for electric utilities to lessen the burden of electricity production on the environment and reduce the cost of electric services through the use of more competitive, cleaner power sources. While neither technological innovation nor the magic of the market will in and of itself reinvent the electric utility industry, the influence of those dynamic forces must be understood. Reinventing Electric Utilities is an important work for policymakers, energy professionals, and anyone concerned about the future of the electric services industry.

The SMUD portrait is complemented by regional case studies of Portland General Electric and the Washington Public Power Supply System, the New England Electric Service, Northern States Power, the Electricity Reliability Council of Texas, and others.

Power interruptions of the scale of the North American Blackout of 2003 are rare, but they still loom as a possibility. Will the aging infrastructure fail because deregulated monopolies have no financial incentives to upgrade? Is centralized planning becoming subordinate to market forces? Understanding Electric Utilities and De-Regulation, Second Edition provides an updated, non-technical description that sheds light on the nature of the industry and the issues involved in its transition away from a regulated environment. The book begins by broadly surveying the industry, from a regulated utility structure to the major concepts of de-regulation to the history of electricity, the technical aspects, and the business of power. Then, the authors delve into the technologies and functions on which the industry operates; the many ways that power is used; and the various means of power generation, including central generating stations, renewable energy, and single-household size generators. The authors then devote considerable attention to the details of regulation and de-regulation. To conclude, one new chapter examines aging infrastructures and reliability of service, while another explores the causes of blackouts and how they can be prevented. Based on the authors' extensive experience, Understanding Electric Utilities and De-Regulation, Second Edition offers an up-to-date perspective on the major issues impacting the daily operations as well as the long-term future of the electric utilities industry.

Modem industrial society functions with the expectation that electricity will be available when required. By law, electric utilities have the obligation to provide electricity to customers in a "safe and adequate" manner. In exchange for this obligation, utilities are granted a monopoly right to provide electricity to customers within well-defmed service territories. However, utilities are not unfettered in their monopoly power; public utility commissions regulate the relationship between a utility and its customers and limit profits to a "fair rate of return on invested capital. " From its inception through the late 1970s, the electric utility industry's opera tional paradigm was to continue marketing electricity to customers and to build power plants to meet customer needs. This growth was facilitated by a U. S. energy policy predicated upon the assumption that sustained electric growth was causally linked to social welfare (Lovins, 1977). The electric utility industry is now in transition from a vertically integrated monopoly to a more competitive market. Of the three primary components (generation, transmission, and distribution) of the traditional vertically integrated monopoly, generation is leading this transformation. The desired outcome is a more efficient market for the provision of electric service, ultimately resulting in lower costs to customers. This book focuses on impediments to this transformation. In partiCUlar, it argues that information control is a form of market power that inhibits the evolution of the market. The analysis is presented within the context of the transformation of the U. S.

"Regulatory linearity" refers to an agency (in this case, the Federal Energy Regulatory Commission) that continues to promote reinvention efforts notwithstanding serious obstacles, which the article discusses in the context of initiatives to restructure the electric utility industry.

Most Americans still do not understand electric utilities, and many consumers have only a vague grasp of the intricacies of regulation and deregulation. This is a paradox of sorts; regulation, in particular, seems easy enough to grasp. The real difficulty lies in understanding how power companies have manipulated the regulators. If you think utility deregulation has done away with electric utility monopolies, think again! Deregulation is a myth-it's business as usual for the power companies. For most of America, utility deregulation has yet to become a reality. Even if it does, electric companies will still swindle those they serve. Why? One reason: deregulation allows the utility giants to retain control of the transmission and distribution of electricity. Utility cheating has gone unchecked for more than a century. Author Joe Seeber has caught the electric companies red-handed, from fudged financials and courtroom trickery to meter manipulation and outright fraud. He paints a compelling portrait of an industry wired for greed-and argues that it's time someone pulled the plug.

Traditional theories hold that regulatory agencies act mainly as champions of the interest they are meant to oversee. Anderson looks at regulation within the fast-changing environment. By adding the external political and internal bureaucratic variables he evaluates the capture theory.