Electricity - Deregulation Of Electric Utilities

Regulated for decades as "natural monopolies," much like the railroad and telecommunications industries, electric

FIGURE 8.3

utilities are in the midst of a radical, highly controversial shift toward unregulated markets and increased competition. In 1978 Congress passed the Public Utilities Regulatory Policy Act (PURPA; PL 95-617), which required that utilities buy electricity from private companies when that would be a lower-cost alternative to building their own power plants. The Energy Policy Act of 1992 (PL 102-486) gave other generators greater access to the market, resulting in a flurry of activity in state and federal legislatures as a host of interest groups debated regulatory, economic, energy, and environmental policies. State public utility commissions conducted proceedings and designed rules related to competition in the electric utility industry.

California was a leader in deregulation activities. In the summer of 2000, however, the state experienced rolling blackouts and electricity bills doubled for many. Fearful of the blackouts and price spikes that afflicted California, by the spring of 2001 most other states had slowed or stopped their efforts to deregulate their electricity markets. At that time, twenty-four states and the District of Columbia had begun deregulation. Then, during an investigation of Enron Corporation, documents were found that showed that Enron electricity traders used strategies that added to electricity costs and congestion on transmission lines for their own profit. These revelations lowered public confidence in power companies in general. As a result of these events and an eroding confidence in deregulation, only seventeen states plus the District of Columbia were actively engaged in restructuring activities as of February 2003, as shown in Figure 8.6 from the

FIGURE 8.4

Energy Information Administration (EIA). In addition, five states had delayed the restructuring process, and one state (California) suspended its restructuring activities. Restructuring was not active in twenty-seven states.

TABLE 8.2

Electricity end use, selected years, 1949–2003
(Billion kilowatthours)
	Retail sales1
Year	Residential	Commercial2	Industrial2	Other3	Total	Direct use4	Total
1Electricity retail sales to ultimate customers by electric utilities and, beginning in 1996, other energy service providers.
2Retail customers are classified as "Commercial" or "Industrial" based on NAICS (North American Industry Classification System) codes or usage falling within specified limits by rate schedule.
3Public street and highway lighting, other sales to public authorities, sales to railroads and railways, and interdepartmental sales.
4Commercial and industrial facility use of onsite net electricity generation; and electricity sales among adjacent or co-located facilities for which revenue information is not available.
R=Revised.
P=Preliminary.
E=Estimate.
NA=Not available.
Note: Totals may not equal sum of components due to independent rounding.
Web Pages: For data not shown for 1951–1969, see http://www.eia.doe.gov/emeu/aer/elect.html. For related information, see http://www.eia.doe.gov/fuelelectric.html.
SOURCE: "Table 8.9. Electricity End Use, Selected Years, 1949–2003 (Billion Kilowatthours)," in Annual Energy Review 2003, U.S. Department of Energy, Energy Information Administration, Office of Energy Markets and End Use, September 7, 2004, http://www.eia.doe.gov/emeu/aer/pdf/aer.pdf (accessed September 28, 2004)
1949	67	45	123	20	255	NA	255
1950	72	51	146	22	291	NA	291
1955	128	79	260	29	497	NA	497
1960	201	131	324	32	688	NA	688
1965	291	200	429	34	954	NA	954
1970	466	307	571	48	1,392	NA	1,392
1971	500	329	589	51	1,470	NA	1,470
1972	539	359	641	56	1,595	NA	1,595
1973	579	388	686	59	1,713	NA	1,713
1974	578	385	685	58	1,706	NA	1,706
1975	588	403	688	68	1,747	NA	1,747
1976	606	425	754	70	1,855	NA	1,855
1977	645	447	786	71	1,948	NA	1,948
1978	674	461	809	73	2,018	NA	2,018
1979	683	473	842	73	2,071	NA	2,071
1980	717	488	815	74	2,094	NA	2,094
1981	722	514	826	85	2,147	NA	2,147
1982	730	526	745	86	2,086	NA	2,086
1983	751	544	776	80	2,151	NA	2,151
1984	780	583	838	85	2,286	NA	2,286
1985	794	606	837	87	2,324	NA	2,324
1986	819	631	831	89	2,369	NA	2,369
1987	850	660	858	88	2,457	NA	2,457
1988	893	699	896	90	2,578	NA	2,578
1989	906	726	926	90	2,647	108	2,755
1990	924	751	946	92	2,713	114	2,827
1991	955	766	947	94	2,762	118	2,880
1992	936	761	973	93	2,763	122	2,886
1993	995	795	977	95	2,861	128	2,989
1994	1,008	820	1,008	98	2,935	134	3,069
1995	1,043	863	1,013	95	3,013	144	3,157
1996	1,083	887	1,034	98	3,101	146	3,247
1997	1,076	929	1,038	103	3,146	148	3,294
1998	1,130	979	1,051	104	3,264	161	3,425
1999	1,145	1,002	1,058	107	3,312	183	3,495
2000	1,192	1,055	1,064	109	3,421	183	3,605
2001	1,203	1,089	964	114	3,370	RE174	R3,544
2002	R1,267	R1,116	R972	R107	R3,463	RE178	R3,641
2003	P1,280	P1,119	P991	P109	P3,500	E175	P3,675