Paper
Electricity is the principal force that powers modern society. It lights
buildings and streets, runs computers and telephones, drives trains and
subways, and operates all variety of motors and machines. Yet most people,
despite their great dependence on electrical power, hardly give it a
thought. They flip a switch, turn a key, or pick up a phone and expect the
power to be there without fail.
The almost-century old structure of the American electric utility industry
is in need of change. Almost all interested parties accept the fact that
technological change and altered views of the nature of government
intervention have made the idea of increased competition attractive (Johnson
35). But just how should the competitive market be structured? Some
participants want complete deregulation so they can derive the fullest
benefits of competition quickly. Others argue that the unfettered free
market, however, will cause hardship and inequities (36).
Stability in electrical power has traditionally depended on a system highly
regulated by federal and state government. In recent years, however, many
leaders in government and industry alike have pushed for deregulating the
system to make it more responsive to changes in business and technology and
more open to the forces of free-market competition (Craven C5).
Deregulation has been successful in reducing costs and promoting innovation
in airlines, natural gas, telecommunications and other industries. The
electric industry is next.
Initial steps to deregulate electrical power are now being taken in the
United States and Canada. Today the subject is being actively debated in
board-rooms and state-houses across the Continent. Everyone is wondering
what deregulation will do to the industry. People do not know how it will
affect businesses and consumers, and they are debating whether to move fast
or slow with deregulation.
The "open access" rule of the Federal Energy Regulatory Commission went into
effect on July 9, 1996. Known as Order 888, it applies only to wholesale
transactions. It requires public utilities that own, operate, or control
transmission lines to charge other firms the same transmission rates they
charge themselves, under comparable terms and conditions of service (Encarta
"Deregulation"). This will open control of the market, and it will prevent
utilities from denying transmission grid access through prohibitively high
rates.
Public utilities, municipal utilities, and rural cooperatives are the only
customers that are able to purchase wholesale power for resale. Office
buildings provide the power to their end users, but the tenants, building
owners, and managers do not meet the "obligation to serve" definition that
would enable BOMA members to purchase wholesale marker power (Craven C5).
FERC has since stated that it has no intention of moving further and
mandating open access for retail sales, as it believes that to be beyond its
jurisdiction (Gendy 48).
FERC is clearly leaving retail deregulation to the states and the United
States Congress. As a sign of its importance, several electricity
competition bills were introduced in both the House and the Senate this
year. Additionally, the House Subcommittee on Energy and Power held over
twenty hearings in Washington, DC, and around the country (50). Although
the 105th Congress adjourned without a federal deregulation mandate, the
debate is well underway and congressional leaders have stated that
electricity deregulation will rate high on their list for action in 1999
(52).
On one hand, restructuring of the electric utility industry in the coming
years means that deregulation may occur in terms of prices and entry of
competitors into the market. On the other hand, government intervention of
some areas of the business is likely to continue to ensure maintenance of
socially desirable functions (Williams 23). Some make the assumption that
restructuring is the same as deregulating, but this is not true.
As much as some utility executives may protest deregulation of prices, many
parties agree that traditional regulation appears flawed. In the prosperous
years, when new construction of power plants reduced the average cost of
electricity, regulation that set rates based on the value of the new
equipment worked fine because rates generally decreased. In the 1970s and
later, utility construction became more and more costly, and the high rates
were a result of those higher costs (Williams 26). Regulatory rules
encouraged utilities to complete long-delayed power plants even if the
demand for power was not likely to warrant such big plants or because poor
management caused costs to escalate.
Even as states and the federal government debate bills for restructuring the
utility industry, technological innovation could change the entire nature of
the electric supply business. For about a hundred years, the structure of
the regulated industry has included large, central power-plants that
generated electricity for distribution to homes and businesses. These
plants had customers linked to utility companies through a network of wires
(Gendy 48). This structure may change as new technologies allow
decentralized and disconnected users to get power just like they used to
(Craven C5).
Fuel cells making electricity and water, micro-turbines using natural gas,
photovoltaic cells and energy storage systems which allow people to obtain
electricity from the sun may allow people to isolate or remove themselves
from the electric power grid. They may also connect with their neighbors
and other businesses to create similar synergies that utilities obtained by
interconnecting their transmission systems (Washington Post H04). With the
flourishing of smart electronic technologies used for communications,
monitoring, and energy efficiency, this scenario becomes more feasible
(Williams 22). We may see this in the near future.
More than any other topic raised during the electricity deregulation debate,
the stranded cost issue has the potential to sink the entire reform effort.
This does not have to be the main issue (Craven C5). Calls for stranded
cost compensation are unjustified. There is no evidence supporting the
thought that a literal "regulatory compact or contract" of any sort exists
to justify a multibillion-dollar bailout of utilities. The world will not
end if stranded cost recovery is limited or denied. New firms will come up
to provide the service in place of the few utilities that might fail.
Entrepreneurism and innovation will be shown in an environment free of the
monopolistic methods of the past. Customers, who for so long have been
forced to pay the high costs associated with inefficient and uncompetitive
markets, finally will be given the choice to shop for electricity as they
would any other commodity in the free market (Kuttner A21).
In the end, however, the federal role in this process by necessity must be
somewhat constrained. They can’t have the power to change the whole system
themselves. Although Congress rightly can exercise its constitutional
authority to protect the public interest in the free, unhampered flow of
interstate commerce, it cannot prevent the states from determining how much,
if any, compensation is appropriate. Federal legislators should encourage
the states to proceed cautiously, with the interests of every American
consumer in mind as they examine the claims made by their in-state utilities
for compensation with the interest. This compensation would be given at the
expense of a competitive future. Congress should not shy away from
exercising its authority under the Commerce Clause to ensure that
state-by-state stranded cost determinations will not prohibit the
development of a competitive national marketplace. By working together,
federal and state regulators can ensure that the stranded cost recovery
process will not become an obstacle to the free market future for
electricity.
"A Primer on How to Deal with the Power of Choice." Washington Post 17
October 1999: H04.
Craven, Eric. "Educating consumers about utility deregulation and
purchasing." Kansas City Star 12 March 1998: C5.
Deregulation. Computer Software. Microsoft Encarta. Microsoft. 1998.
Eastern Maine Electric Co-op. "www.emec/deregulation" Internet source.
1997.
Electric Potential Inc. "electric-potential" Internet
source. 1996.
Gendy, Matthew. "Deregulation in America: Positive?" Newsweek 17
November 1995: 47-53.
Johnson, Nick. "U.S. and International Deregulation." U.S. News and World
Report 4 August 1995: 34-36.
Kuttner, Robert. "Is This an Age of Deregulation of Reregulation?"
Washington Post 2 November 1999: A21
Williams, Terry. "Electric Deregulation." Time 23 April 1996: 21-27.
Другие работы по теме:
Multi Strand Science Essay Research Paper NAME
Multi Strand Science Essay, Research Paper NAME: DUE DATE: YEAR 12 MULTI-STRAND SCIENCE Choose ONE of the following local industries and prepare a resource management case study for that industry.
Airline Deregulation Essay Research Paper Give credit
Airline Deregulation Essay, Research Paper Give credit where credit is due. Twenty years ago, the Carter Administration and Congress, behind the ceaseless efforts of Alfred E. Kahn, former chairman of the now defunct CAB (Civil Aeronautics Board), deregulated the airlines, a move that has saved consumers billions of dollars.
Y2k The Truth Shall Set You Free
Essay, Research Paper It s certain that the beginning of the year 2000 we will have computer problems related with the Y2K bug. The Y2K bug will affect services we use everyday such as, Communications, Electric power, Oil and Gas, Transportation, and Water supply. Unfortunately many people are skeptical and believe the Y2k bug is going to cause the end of the world, as we know it.
Econ Essay Research Paper When Virtue Pays
Econ Essay, Research Paper -When Virtue Pays a Premium Through the help of government deregulation, increase in technology, and increased awareness of global environmental issues, a transition from fossil fuels to renewable resources is imminent. The cost of renewable resources are on the decline and they are starting to become a real threat to compete with fossil fuels.
The Commonwealth Essay Research Paper How did
The Commonwealth Essay, Research Paper How did traditional industrial location factors influence The pattern of industry in the UK? Traditional industrial location factors were, in the words of Karl Marx: Land, Labour, Capital and Raw materials , and these greatly influenced industrial location in the UK up until the 70 s:
California Utility Essay Research Paper Chris Parker
California Utility Essay, Research Paper Chris Parker 482.004 Dr. Singer In 1996 deregulation allowed California utility companies to sell power plants and collect over 19 billion dollars in ratepayer subsidies. The money was used to purchase plants in other countries, reward executives with huge pay raises and buy back stock.
Energy Deregulation Essay Research Paper As we
Energy Deregulation Essay, Research Paper As we have witnessed the rolling blackouts and emergency alerts throughout many parts of our state of California within the past 12 months, there is a question waiting to be answered. Why do we have an energy crisis when there are other states that are doing just fine? Before we come to any hasty conclusion, let us ask ourselves what happened to the energy policy during the mid 90s? During that period the electric utilities went from being highly regulated to being deregulated following the trend in successful deregulation of many industries such as airline and telecommunication industries.
Airline Deregulation Essay Research Paper On October
Airline Deregulation Essay, Research Paper On October 24, 1978, President Carter signed into law the Airline Deregulation Act. The purpose of the law was to effectively get the federal government out of the airline business. By allowing the airlines to compete for their customers’ travel dollars, was the thinking, that fares would drop and an increased number of routes would spring up.
Late 1990s American Essay Research Paper In
Late 1990s American Essay, Research Paper In the late 1990s Americans for the first time found themselves in the position of being able to choose an electricity provider, as the once staid and monopolistic electric utility industry entered an era of freewheeling competition and deregulation. In this book Richard F.
Why The Electric Chair Is A Fair
Punishment Essay, Research Paper This topic is a very controversial one. The paper you are about to read could cause intense arguments between some groups of people. All that doesn?t matter to me because when you finish reading this, you will agree with me if you don?t already.
Warren Electric Essay Research Paper The electronic
Warren Electric Essay, Research Paper The electronic distribution industry is one of the fastest growing and changing industries right now. One of the problems right now is that the industry is going into a direction that it has never been before. Massive acquisitions and mergers are causing a slight problem right now in this industry.
Canadian Film Industry Essay Research Paper ConclusionWe
Canadian Film Industry Essay, Research Paper Conclusion: We as Canadians watch movies on a weekly basis. On average, most people rent videos or attend the local movie theatre to attend and view the latest film. However, Canadians are not aware that they have become desensitized to the global Americanization of the U.S. film industry, which has been turned strong by Hollywood.
A Compromise For The Future Essay Research
Paper A Compromise for the Future As America enters the new millennium, our nation faces an enormous challenge. This challenge is to enable the economic expansion of recent years to continue and to reach even higher levels of prosperity. In order for this to happen, many factors will have to be examined and new policies must be implemented that will help the economy strive.
Foot Mouth Disease Essay Research Paper Foot
Foot Mouth Disease Essay, Research Paper Foot and Mouth Disease, its effects in the restaurant industry Any time there is an out brake of any number of diseases at the production level of livestock it causes great concern in the industry and the implications are far reaching indeed. On the heels of the European Unions out break of Mad Cow Disease they now face Foot and Mouth Disease, what does this have to do with the American restaurant industry? Everything.
Market Power In The Deregulation Of Electicity
Essay, Research Paper Market power, which is at the heart of the debate over ownership and control of the electricity transmission network, has been identified by the FERC (Federal Energy Regulatory Commission) as a potential impediment to the development of an unencumbered competitive market for electricity.
Wireless Application Protocol Essay Research Paper Wireless
Wireless Application Protocol Essay, Research Paper Wireless Application Protocol (WAP) Background Market study has shown that the number of mobile users is exceeding the number of PC users. Some of the industry leaders have created a forum to evolve an industry standard for providing internet access to users over wireless access.
Deregulation Of Natural Gas Essay Research Paper
The Deregulation of the Natural Gas Industry The main objective of my paper is to discuss the key points surrounding the deregulation of the natural gas industry. I will lead into this discussion by explaining how the industry performed during a period of regulation and what transpired forcing a change to deregulate.
Electrical Utility Deregulation Essay Research Paper Electrical
Electrical Utility Deregulation Essay, Research Paper Electrical utility deregulation is the process of transforming electrical utility companies from regulated monopolies to market-driven suppliers of competitive energy and services. (Reliant Energy HL&P 1999) It means that customers will have the ability to choose their electrical supplier.
Japanese Deregulation Essay Research Paper JAPAN
Japanese Deregulation Essay, Research Paper JAPAN’S “BIG BANG” FINANCIAL DEREGULATION: IMPLICATIONS FOR REGULATORY AND SUPERVISORY POLICY Former Prime Minister Ryutaro Hashimoto announced that government would undertake an extensive deregulation of Japan’s financial system by 2001 a proposal likened by senior officials to the “Big Bang” financial deregulation in the United Kingdom more than a decade ago.
Deregulation Essay Research Paper Pg 1
Deregulation Essay, Research Paper Pg. 1 Deregulation The twentieth century will be known to future economists as the era that gave birth to a new world economic thinking which gave way to massive modern, technological innovations and changes. These massive changes have created a highly developed and mobile world economy where there has been a constant power struggle between the sate and market.
Electric Deregulation Essay Research Paper In the
Electric Deregulation Essay, Research Paper In the past electricity pricing was controlled by regulation. The roots of modern day regulation can be traced all the way back to the late 1800’s and found in the form of antitrust. By the beginning of the 20th century, the U.S. government had formed many regulatory commissions.
Electric Cars Essay Research Paper In 1837
Electric Cars Essay, Research Paper In 1837 the first electric car was built in Scotland by a man named, Robert Davidson. Electric cars were being produced all over in the 1880’s when the lead acid battery was perfected. In 1892 in Chicago the first electric car was exhibited creating a new sensation for cars.
Are Alternative Fuels The Best Alternative Essay
, Research Paper Are Alternative Fuels The Best Alternative? With the millennium just around the corner, new energy conserving ideas are being brought to the market. Among the most prominent are cars powered by electricity, as opposed to gasoline. Electric vehicles seem practical, and they protect the environment by reducing pollution.
Deregulation Essay Research Paper Electricity is one
Deregulation Essay, Research Paper Electricity is one of the largest selling commodities in the nation. In 1994, over $200 billion worth of electricity was generated and sold. In the same year, $30 billion in cattle were sold, and $6 billion in wheat changed hands.Electricity has traditionally been delivered through a tightly regulated monopoly where corporate profits were artificially established and assured by oversight panels.
Thomas Edison Essay Research Paper BibliographyThomas A
Thomas Edison Essay, Research Paper Bibliography Thomas A. Edison and his Kinetographic Motion Pictures. Rutgers University Press. 1995. This book gave me a lot of the information I needed on the basic history of Thomas Edison?s work in the motion picture industry. There were also pictures
Deregulation Of Electric Utilities Essay Research Paper
Have you ever tried to get your utilities turned on for a new house or apartment? You call the electric company to make an appointment. Their response is to tell you ?we?ll be right out to turn your power on?, right? No, that?s not how it happens. Usually the soonest appointment you can get is about two weeks from the day you call.
American Airlines Essay Research Paper 1 Issues
American Airlines Essay, Research Paper 1. Issues 2. American Airlines? objectives 3. The airline industry 4. Market 5. Consumer needs 6. Brand image 7. Distribution system 8. Pricing 9. Marketing
Retail Trade Essay Research Paper Write a
Retail Trade Essay, Research Paper Write a structure-performance study of the retail trade industry Paper should include the ff structure 1 Introduction. In this section you give an overview of the industry, its size, growth over the past 10-20 yrs, its important to the economy and other significant factors. 1-2 pages
Guitars Essay Research Paper GuitarsThe electric guitar
Guitars Essay, Research Paper Guitars The electric guitar can be classified in three types on the basis of varied sounds. The most important thing relating to sound are the pick-ups. There are two types of pick-ups that come in guitars, double coil and single coil. A Double coil offers more clarity and has warmer tone.