Competition in the Electric Industry Emerging Issues, Opportunities, and Risks for Facility Operators (1996) / Chapter Skim
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Electric Power Competiton: Perspective of a Regulator
Electric Power Competiton: Perspective of a Regulator
Pages 13-25
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From page 13... ...
If a product or service is not a natural monopoly, believe in letting the competitive market regulate price. To me, price regulation is a very different issue from environmental regulation or health or public safety regulation.
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From page 14... ...
By 1996, more than half of all new generation plants built in this country will be built by companies that do not have monopoly franchises (often called independent power producers or nonutility generators)
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The changing economics of utilities permits any number of nonmonopoly companies to build smaller, more efficient generation plants in a much shorter time than previously was possible. The more competitive global economy has brought opportunities to buy and sell power and generation assets worldwide.
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From page 16... ...
2.15 5.04 Pennsylvania Average 2.32 9.08 SOURCE: Pennsylvania Public Utility Commission, Electric Power Outlook, July 1993.
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From page 17... ...
(The industrial rates are subject to various special contracts at this point, so it is difficult to track them.) If we compare Pennsylvania's average industrial rates with those in other Atlantic seaboard and Midwest states (Table 2)
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Furthermore, electricity ought to be one of the industries in which the United States has an enormous comparative advantage in TABLE 2. Average industrial electricity prices in cents per kilowatthour, stunner 1994 State Average industrial rate, cents/kWh New Hampshire Massachusetts Connecticut New Jersey New York Pennsylvania Ohio Maryland Delaware Virginia Indiana West Virginia U.S.
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From page 19... ...
Duquesne Light Company (residential rate) Germany Italy PECO Energy Company (average rate)
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Some low-cost utilities have argued that there should be no recovery of stranded investments. West Penn Power Company, for example, the company in Pennsylvania with the lowest costs, has taken that line.
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Those investments are all reflected in rates now, pursuant to formulas that allocate stranded investments among the various customer classes. So long as that allocation is respected, cost shifting will not take place, even if regulators provide for 100 percent recovery of stranded investments.
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If green consumers choose solar power, the industry will develop economies of scale and more competitive prices sooner than it otherwise would have. Obligation to serve.
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One could buy generation from the pool, or one could make direct contracts with suppliers. Exclusive use of direct contracts.
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From page 24... ...
With this option, consumers preferring a particular type of generation or related services could more precisely purchase the services they wanted or obtain volume discounts by purchasing for multiple facilities. Through a spot market at an average price.
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From page 25... ...
A third party would assemble a group of consumers, to obtain the broadest range of services without requiring knowledgeable, active involvement by consumers. Through the local distribution utility providing electricity as an aggregator.
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