The profound changes now occurring in the electric industry will most directly affect those who are engaged in the enterprises of generation, transmission, and distribution of power. But challenges and opportunities confront gas companies as well. Certainly, the electric industry will continue to influence markets for gas: both in bulk fuel supply and in retail energy. Beyond that broad observation, though, much else depends on the speed and form of the transition to a competitive electricity market.
Will the transition be swift and complete? If so, one could expect gas to compete on a level playing field for retail customers, with gas-fired plants emerging as the investment of choice for new capacity.
Or will it prove slow and compromised? In that case, one can envision electric utilities shifting costs to save threatened retail load, with "special deals" proliferating to keep nuclear plants running even though not economical.
Where is the power business going? How is it responding to change? What does it all mean for natural gas?
Forces of Change
in the Power Business
The electric power industry stands as one of the last remaining regulated, monopoly industries in the United States. With regulated rates far above current market prices, pressure is mounting for increased reliance on market forces. Opening this market to competition gives policymakers a broad opportunity to make U.S. business more competitive (em to foster economic development, bolster local industry, and cut consumer prices generally. It is little wonder, then, that the forces of change have been irrevocably unleashed in the power business. These forces stem from several factors:
s Global Competition. Industrial managers worldwide leave no stone unturned in their efforts to cut costs and boost productivity.