TABLE 2.1 Major Industry Players in the U.S. Electric Industry

Asset Owners Institutional Structures of Asset Owners Other Asset Operators and Coordinators Government Entities and Regulatory Authorities Industry Associations and Institutions

Vertically integrated utilities (owning generation, transmission, and distribution) Investor-owned electric utilities (IOUs) North American Electric Reliability Council (NERC) State regulatory commissions Electric Power Research Institute (EPRI)
Generation and transmission utilities Rural electric cooperatives (RECs or Co-ops) Independent system operators (ISOs) Power marketing authorities (PMAs) National Regulatory Research Institute (NRRI)
Transmission utilities or companies Municipal utilities (MUNIs) Regional transmission operators (RTOs) Federal Energy Regulatory Commission (FERC) Edison Electric Institute (EEI)
Distribution utilities Federal power agencies Regional reliability organizations (RROs) U.S. Department of Energy (DOE) National Rural Electric Cooperative Association (NRECA)
Generation companies     Energy Information Administration (EIA) Electric Power Supply Association (EPSA)
Marketing companies     Bonneville Power Administration (BPA) National Association of Regulatory Utility Commissioners (NARUC)
      Tennessee Valley Authority (TVA) Association of State Energy Research and Technology Transfer Institutes (ASERTTI)
      Western Area Power Administration (WAPPA) National Association of State Utility Consumer Advocates (NASUCA)

other stakeholders who actively participate in electric power industry activities.

Regulatory Activities

Due to its technical and economic structure, the U.S. electric power industry is one of the most highly regulated in the nation. While other nations have adopted state-owned or national utilities to provide electric service, the United States early on adopted an approach that included a large number of private firms operating in natural monopoly settings and whose actions (e.g., determining rates, defining terms of electric service) were overseen by public regulatory commissions.

State Regulatory Commissions

Nearly all states have public utility commissions and/ or energy offices that govern certain activities of regulated utilities operating pursuant to laws in that state. These commissions govern the rates, terms, and conditions of service of investor-owned utilities in the state and, in a few cases, also regulate the rates of rural electric cooperatives. The scope of regulatory authorities varies by state but often includes approving tariffs, allowed return on investment, and service standards. In many jurisdictions, the most important powers held by state public service commissions are the ability to (1) set consumer prices, (2) impose penalties for noncompliance with rules and regulations, and (3) require prior approval of all financing.

Federal Energy Regulatory Commission

Various activities of entities in the electric power industry are also regulated by FERC, the federal agency authorized to implement, among other things, the Federal Power Act, the Natural Gas Act, parts of the Energy Policy Act, and other federal statutes. FERC regulates the terms and conditions of power delivery and transactions in interstate commerce and, with the enactment of the Energy Policy Act of 2005, is responsible for ensuring enforceable reliability standards for the electric power industry.

In general, users ultimately pay the electric supplier's cost of providing them with service. There is a longstanding tradition of cost-based rates for the parts of the industry not considered competitive, such as transmission and delivery service. In many parts of the country, much generation service is also provided and paid for on the basis of cost, rather than market-based rates.

In the 60 percent of the United States where markets are used to allocate power at the wholesale level, ISO/RTO-type organizations act as regulatory intermediaries under the jurisdiction of FERC and to a lesser extent state regulatory commissions. Their objectives are to administer fair and

The National Academies of Sciences, Engineering, and Medicine
500 Fifth St. N.W. | Washington, D.C. 20001

Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement