The changing structure of the electric power industry: Selected issues, 1998

More than 3,000 electric utilities in the United States provide electricity to sustain the Nation`s economic growth and promote the well-being of its inhabitants. At the end of 1996, the net generating capability of the electric power industry stood at more than 776,000 megawatts. Sales to ultimate consumers in 1996 exceeded 3.1 trillion kilowatthours at a total cost of more than $210 billion. In addition, the industry added over 9 million new customers during the period from 1990 through 1996. The above statistics provide an indication of the size of the electric power industry. Propelled by events of the recent past, the industry is currently in the midst of changing from a vertically integrated and regulated monopoly to a functionally unbundled industry with a competitive market for power generation. Advances in power generation technology, perceived inefficiencies in the industry, large variations in regional electricity prices, and the trend to competitive markets in other regulated industries have all contributed to the transition. Industry changes brought on by this movement are ongoing, and the industry will remain in a transitional state for the next few years or more. During the transition, many issues are being examined, evaluated, and debated. This report focuses on three of them: how wholesale and retail prices have changed since 1990; the power and ability of independent system operators (ISOs) to provide transmission services on a nondiscriminatory basis; and how issues that affect consumer choice, including stranded costs and the determination of retail prices, may be handled either by the US Congress or by State legislatures