Transmission and distribution

Introduced in the 105th Congress

• H.R. 296, sponsored by John Shadegg (R-Ariz.). Would privatize the federal Power Marketing Administrations, splitting them into regional corporations to market and maintain generation and transmission services. Stock would be sold to recover outstanding federal debt; holding companies could invest in the corporations.

• H.R. 338, sponsored by Cliff Stearns (R-Fla.). Would repeal Section 210 of the Public Utility Regulatory Policies Act (PURPA) of 1978, but would force utilities to honor QF contracts entered prior to Jan.

In April, Texas Utilities announced that it would buy ENSERCH, Western Resources launched a hostile takeover bid for Kansas City Power & Light, and The Southern Co. initiated its ultimately futile bid for the United Kingdom's National Power. Eight other pending mergers involving major electric utilities have been announced during the last year. Utility managements clearly believe their future success requires merging with other utilities.

First came the Pool, with its faults and virtues.

Now comes a wave of troubling takeovers.

What happens when retail supply opens up?

Much of the pressure to reform the electricity supply industry in the United States assumes that the United Kingdom's electricity experiment offers a proven model.

Central and South West Corp.'s subsidiary, Central Power and Light Co. (CPL), has proposed that all ERCOT nonnuclear utilities (em including IPPs, co-ops, and municipals (em become part of a competitive wholesale bulk power pool run by an independent system operator (ISO).

Transmission and distribution companies would continue to own and operate power lines, purchase all nonnuclear generation from the pool, and assume responsibility for actual delivery.

What are the essential characteristics of the system of governance that will be required for a new, North American electric industry with interconnected and interdependent transmission networks and trading areas?

Electric transmission networks are natural monopolies, as are the many independent network

control systems that coordinate the use of generators and loads and preserve system reliability.

Technological advances in electric generation and telecommunications make utility competition both possible and inevitable. These economic forces will eventually break down the regulatory structure of the electric industry. However, public policy should play a crucial role in molding and nurturing competition.In recent months, regulators in a majority of the states have opened proceedings to study electric competition.

New business opportunities, improved internal communications, and energy information services: three solid reasons electric utilities should form a telecommunications strategy (if they haven't already). Yet, while these motivations are compelling, none really demands utility participation.

The winds of competition are blowing. Some find them chilling; others find them exhilarating. Deregulation calls on competitive markets to stand in for regulatory decisions, giving more choice to customers, reducing costs dramatically, and requiring new capabilities.

Competition is already transforming major portions of the electric industry.

In less than a decade, three powerful trends will converge on gas distributors.