The Energy Policy Act of 1992 was the result. Once independently generated energy was successfully integrated into the electrical transmission grid, pressure increased to open access to all transmission lines, so that all energy producers could sell their wholesale power to the highest bidder. While somewhat successful in promoting development of these alternative energy sources, PURPA played a major role in pushing the electric power industry toward market competition. Electric energy from alternative sources, such as windmills, solar collectors, and cogeneration facilities, became popular experiments throughout the country. In response to energy shortages during the 1970s, PURPA required utilities to purchase power from non-utility producers of renewable energy resources. Many analysts cite the 1978 Public Utility Regulatory Policies Act (PURPA) as the first of several regulatory actions that spurred the electric utility industry to move away from a system of regulated monopolies. These preferential policies and practices, defensible perhaps in an earlier time, result in unfair advantages in a competitive environment.ġ978 Public Utility Regulatory Policies Act ![]() Not only is public utility decision-making more independent, but their revenues are not subject to federal taxation, their capital projects are eligible for tax-exempt bond financing, and their power is often provided at below-market prices from federally owned power facilities. For example, whereas the investments and rate-setting of private utilities require review and approval from a state utility commission, government-owned utilities report only to their individual local governing boards. Government programs and regulations at the federal and state levels have routinely favored government-owned utilities, especially in the West. Regulations Favored Government-Owned Utilities In addition to electricity, natural monopolies have historically been considered to exist in telecommunications, water and sewer systems, and more recently, in cable television. Typically, natural monopolies have been associated with situations where the capital investment required to do a project is so great that densely-populated market areas are required for the project to be economically viable. Primarily because electrical power generation and distribution have been considered "natural monopolies," government has closely regulated private electric companies, and it has owned and operated some municipal and rural systems. Government has played an extraordinarily dominant role in the electric power industry since the lights were first turned on late in the 19th Century. First, however, some historical perspective is provided on electrical power.Įlectric Power Industry Originally Considered a Natural Monopoly ![]() In addition, a parallel move to deregulate the telecommunications industry shares some of the same problems as the electric utility industry and complicates further the public policy concerns for both electricity and telecom. The other, regarding government financial preferences, has received less public attention and will be the primary focus of this paper. The first issue, although complex, is moving rapidly toward resolution. Eliminating the taxpayer subsidies and preferential treatment currently enjoyed by government-owned utilities, which allow them to offer significantly lower rates than their private competitors.Defining "stranded investment costs" and determining the extent to which they will be recovered by existing utilities, and.Indeed, a couple of these "details" represent issues so major that their resolution is as important to the success of restructuring as the original Congressional action in 1992 that started the ball rolling. Successful deregulation and restructuring ultimately will allow customers to choose their electric power provider and allow businesses in the electric utility industry to do what businesses in other sectors have always done: Compete on the basis of established market criteria - price, quality, service, and innovation. Coming before the rules of the game are set and the playing field leveled, these attempts threaten successful restructuring of the electric power industry. Municipalization is the inelegant term describing attempts by government-owned electric utilities to seize markets from private, investor-owned systems. ![]() In the wake of recent actions by Congress and the Federal Energy Regulatory Commission (FERC) initiating deregulation of the electric power industry, government-owned electric utilities are using taxpayer subsidies and special preferences to short circuit marketplace competition.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |