The Government Structure Over the U.S. Electric Industry: Federal--State Tensions
James E. Hickey Jr.
There are about 3,500 separate electric systems in the United States that are owned by various government entities, by consumers (nonprofit cooperatives), and by shareholders (private companies). Most of the electricity in the U.S.A. is provided by private companies. The private electric companies are about 250 in number and they supply about 80% of the electricity in the United States. The private companies are tax-paying corporations that are financed by the sale of stocks and bonds and by the sale of electricity for profit. Most electric systems in the U.S.A. are connected to one another and there are connections with Canada and Mexico. Overall, the U.S. electric system provides a fairly reliable electric supply at a relatively reasonable price.
The government structure over the U.S. electric industry presently is divided between the federal government and the governments of the states. The tension created by this divided government structure has resulted in failures in the U.S. electric industry. Those failures include wasteful and expensive litigation over who has jurisdiction, the cancellation of needed power plants, unnecessarily high electric prices to consumers, a reduction of energy supply options, and harm to international relations. This paper briefly analyzes some of those failures in the U.S. system of dual government authority over electric markets. The paper suggests that other countries like the sovereign states of the former U.S.S.R. may provide, in certain respects, a viable alternative model for future government regulation of the electric industry than the U.S. structure.
The present dual system of federal and state regulation of electricity in the