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U.S. ENERGY INFORMATION ADMINISTRATION Move to Electricity Competition in Full Swing;
Beginning slowly in the late eighties, electricity competition has gained momentum in recent years and has become standard procedure in many parts of the Nation. Regional wholesale electricity trading markets, which were previously nonexistent, are now operating in California, New York, Pennsylvania, New Jersey, Maryland, and in all New England States. Markets also are expected to develop in other regions according to information released today by the Energy Information Administration (EIA) in The Changing Structure of the Electric Power Industry 2000: An Update. The formation of new wholesale electricity markets is, in part, being spurred by the Federal Energy Regulatory Commission's recent Order 2000 requiring electric utilities to form regional transmission organizations. As of July 2000, 24 States and the District of Columbia had approved the introduction of retail competition for electricity. The result: Consumers in many of those States can now choose their electricity provider. California and States in the northeast, where the cost of electricity is relatively high, were at the forefront in allowing retail competition. Other States, e.g., Kentucky and Idaho, whose electricity rates are among the lowest in the Nation, have studied but have not moved toward restructuring the industry. These and other findings are discussed in EIA's new report, which provides a comprehensive look at the industry's history and current trends and issues that are transforming the way the Nation's electric power is produced and sold. Other highlights in the report include: * In response to increasing competition in the industry, many investor-owned utilities (IOUs) are selling some or all of their power plants. Over the past 3 years, IOUs have divested or are in the process of divesting 156.5 gigawatts of power generation capacity, representing approximately 22 percent of the total U.S. electric generation capacity. * Over the past 8 years, 35 mergers involving electric utilities have been completed and 12 mergers are now pending approval. One outcome of this trend is that many electric utilities are becoming much larger in terms of ownership of generation capacity. By the end of this year, the 10 largest IOUs will own an estimated 51 percent of IOU-held generation capacity, and the 20 largest will own approximately 72 percent. * In addition to mergers within the electricity industry, electric utilities, seeing growth opportunities in the natural gas industry, are merging with natural gas companies, contributing to what is referred to as convergence of the two industries. In the last 3 years, 23 convergence mergers have been completed or are pending completion. * Due to divestitures and the general growth of independent power producers (IPPs), the role of the IOU as the traditional provider of electric power is giving way to the expanding role of IPPs. The number of IOUs decreased from 261 in 1992 to 239 in 1998, while the number of IPPs increased from 1,792 in 1992 to 1,954 in 1998. * Numerous legislative proposals have been introduced in the U.S. Congress to address restructuring issues, such as the need for Federal oversight in maintaining the reliability of the power system in an increasingly competitive industry. Summaries of the most prominent restructuring bills are presented in this report. The Changing Structure of the Electric Power Industry 2000: An Update is available on EIA's Web site at: http://www.eia.doe.gov/cneaf/electricity/chg_stru_update/update2000.html. Printed copies will be available later this month from the U.S. Government Printing Office , 202/512-1800 or through EIA's National Energy Information Center, 202/586-8800.
EIA Program Contact: William Liggett, 202/426-1139, william.liggett@eia.doe.gov EIA-2000-17 Contact:
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