The Role of ADR in the Competitive Electric Power Supply Industry

By Vassell, Gregory S. | Dispute Resolution Journal, August-October 2001 | Go to article overview

The Role of ADR in the Competitive Electric Power Supply Industry


Vassell, Gregory S., Dispute Resolution Journal


Restructuring in the electric power supply industry has created some profound changes, says author Gregory Vassell. Increased competition brought about by such restructuring has also meant an increase in disputes. In the following article, Vassell maintains that conflicts involving highly complex technical issues call for creative means of resolution. He writes that arbitration, mediation, and other ADR processes offer an effective alternative to costly and time-consuming court litigation. The Federal Energy Regulation Commission (FERC) likewise recognizes this fact and has since launched a number of ADR-related initiatives, including the creation of its Office of Dispute Resolution Service.

The use of ADR in the electric power supply industry generally evolved in a manner quite similar to other industries. In the commercial area, however, ADR use was profoundly affected by the unique structure of the industry.

That structure, until recently, was predicated on the proposition that the supply of electric power and energy to the public at large is "affected with the public interest" because of the essential nature of the service and, therefore, electric power companies needed to be designated as "electric utilities."

It was also predicated on the proposition that electric utilities-which for the most part evolved into vertically integrated entities in terms of their generation, transmission, and distribution facilities-were "natural monopolies" in a given geographical area. So as to protect the consumer from exorbitant prices that otherwise might be imposed by a single power company providing service in such an area, the electric utilities needed to be subject to overview by regulatory commissions with respect to the adequacy and cost of their services.

Under this regulatory scheme-often called a "regulatory compact"-- electric utilities accepted the obligation to serve any customer in their "certified" service area and a limitation on rates of return on their investment dedicated to public service, in return for regulatory promise that they would have the opportunity-not the guarantee-to earn a fair return on that investment.1

The electric power supply industry's structure predicated on the "natural monopoly" concept established a relationship between individual electric utilities and their customers that was quite different from that usually prevailing in most other commercial circumstances. That relationship involved very close scrutiny by the appropriate regulatory commission-a state commission in the instance of retail customers and the Federal Energy Regulatory Commission (FERC) in the instance of wholesale customers.

Thus, most disputes that might arise between an electric utility and one or more of its customers could not be resolved through litigation in the courts or, in the alternative, through entirely voluntary and private processes of mediation or arbitration-as such processes would apply to other areas of commerce-but rather would need to be dealt with, in the first instance, before an appropriate regulatory commission in accordance with the administrative processes established by that commission.

At the federal level, the FERC (and its predecessor, the Federal Power Commission) has a long history of encouraging resolution of cases before it through settlement, as a way of reducing its hearing caseload to a manageable level. Thus, for example, in fiscal year 1980, 47 of the 54 electric cases before the FERC were resolved by settlement.2 Similar informal processes are also used by many state regulatory commissions.

If a settlement could not be reached in a given case before a regulatory commission, a formal adjudicatory process would need to go forward, culminating in a formal decision by the commission. Such decision would then be subject to an appeal in the courts.3

The electric power supply industry's structure predicated on the "natural monopoly" concept also affected the relationship among individual, vertically integrated electric utilities by eliminating most, if not all, competitive considerations in their dealings with each other. …

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

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.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

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 Role of ADR in the Competitive Electric Power Supply Industry
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?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access 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

    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.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.