Feature
Story
The Road to Electricity
Industry Restructuring:
‘Potholes’ develop along the way
Tim Merrill, General Manager, NRG Energy Center Pittsburgh
All district energy managers know
the importance of electricity to
their operations. For years, these
electricity users bought their requirements
from the local utility under tariff rates
that did not change all that much except
for fuel adjustments or after rate cases.
In many parts of the country, however,
district energy managers have had to
become familiar with buying electricity
from competing vendors under different
price structures – just as they had to
become familiar with buying natural gas
from sellers other than the local public
utility. In those states where electricity
markets were starting to develop, some
buyers have become disenchanted with
these incipient electricity markets, while
others like what they see and continue
to welcome the new choices offered by
competing sellers.
electricity buyers to choose among competing sellers to satisfy their electricity
needs. A decade later, a number of these
users are questioning whether restructuring the electricity industry was a good
idea after all. Indeed, some are calling
for a return to old-fashioned, cost-based
regulation. What caused this pothole on
the road to competition to develop?
To understand why these early
advocates of competition are singing
another tune, it is necessary to step back
and look at the history of electricity
industry restructuring. Long before those
state-based restructuring initiatives, there
were court opinions, legislation and regulations at the federal level resulting in
changes to the electric industry structure
that had existed for almost 100 years.
Electric utilities (investor-owned, govern-ment-owned or cooperatively owned) were
predominately vertically integrated enti-
A Look Back
Ten years ago, electricity users were
hopeful that competition within the electricity industry would bring lower prices.
Industrial and commercial electricity
users were some of the most outspoken
champions of competition. They helped
craft the legislation and/or regulations
in approximately 20 states that allowed
Copyright Tony Tremblay.
