The Past and Future of Electricity Regulation

By Tomain, Joseph P. | Environmental Law, Spring 2002 | Go to article overview

The Past and Future of Electricity Regulation


Tomain, Joseph P., Environmental Law


 
   By 2006-2011, electricity will be purchased and sold in both wholesale and 
   eligible retail markets by any willing creditworthy participant. Markets 
   will clear with competitive prices. Competitive prices will function so as 
   to ration existing supplies efficiently in the short run and to elicit 
   adequate technology and infrastructure in the long run, so that there will 
   be no involuntary curtailment of service at market prices. Electricity 
   markets will be both transparent and liquid, and market participants will 
   have opportunities to hedge risks. Although regulation of monopoly service 
   providers will continue, even these monopolies will feel some pressure of 
   competitive market forces. (1) 

I. INTRODUCTION

The goal of the Federal Energy Regulatory Commission (FERC) staff to achieve competitive electricity markets by 2011 is overly ambitious, but nonetheless worthy. There is much to note in the quotation. First, both wholesale and eligible retail markets will be competitive, transparent, and liquid. Second, the markets will be so efficient that consumers will not experience involuntary curtailments. Third, market actors will be able to hedge risks, which is necessary for supply reliability. Finally, regulation of monopoly service will continue. This Article concentrates on the continuing regulation of the electricity industry by looking at the past and speculating about the future. Like Heisenberg's Uncertainty Principle, which held that an observer cannot know both the speed and position of an electron, the present state of electricity regulation is too dynamic to pin down.

The last eighteen months have been remarkable for the electricity industry. The California crisis of the summer of 2000, the war against Afghanistan, and most recently, the Enron debacle, called attention to industry restructuring and the future of national energy policy. While each of these events have been catastrophic for California, Enron, and the world (in the case of Afghanistan), none of them should change the direction of electric energy policy. At bottom, the California crisis was about poor economic predictions and poor regulatory design. The Enron debacle was about poor financial hedge management along the lines of the Long Term Capital Management collapse in 1998. (2) And the Bush administration's energy policy was set in place before September 11, 2001 and the following Afghan war. In short, none of these events should affect restructuring because none of them addresses what is most significant, the ability to construct and maintain an efficient reliable transmission system.

Continued regulation is warranted because the transmission segment of the electric industry maintains natural monopoly characteristics. Further, until there are significant technological advances, for example in distributed generation or fuel cells, regulation is justified. The discussion of electricity transmission will be placed in context by briefly discussing the California crisis and Enron in Part II. Part III examines the remaining aspects of natural monopoly in the electricity industry. Part IV discusses the role of electricity in national energy policy. The Article concludes by identifying five challenges facing the industry and its regulators.

II. THE CURRENT SITUATION OF ELECTRIC INDUSTRY RESTRUCTURING

The language we use in policy analysis is almost as important as the language we use in legal analysis. The popular perception is that the Reagan Revolution was the beginning of deregulation during the last quarter of the twentieth century. That perception is inaccurate. The Carter administration engaged in the deregulation of airlines, trucking, energy, and other industries. (3) Still, the Reagan years stressed the importance of deregulation across a broad range of industries including electricity. Deregulation was and is driven by politics and economics. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Past and Future of Electricity Regulation
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.