Regulation and Rates for Electricity
Electric utilities have historically been franchise monopolies, vertically integrated from power production through transmission, distribution, and customer service with no competition from other electric utilities. However, in many parts of the country, electric and gas utilities do compete. Rates charged by these utilities were determined in a regulatory proceeding: Electric utilities proposed rates that compensated them for their expenses and allowed them to earn a reasonable return; state regulatory commissions reviewed and approved the proposals.
This historical relationship between electric utilities and their regulators is undergoing a dramatic change. Policymakers are restructuring and deregulating portions of the electric industry. Restructuring of the electric industry is consistent with the deregulation of other U.S. industries since the 1980s. The objective in "restructuring " is to increase efficiency, lower costs, increase customer choices, and lower the prices paid by consumers in restructured industries.
As in other industries, restructuring of the electric industry is a response to underlying conditions in the industry. Policymakers are responding to two phenomena. First, there is a disparity in retail electric prices among states and regions. For example, the average price of electricity in New England states such as New Hampshire (nearly 12 c/kWh) is almost three times as large as the price in low-cost states such as Idaho and Washington (approximately 4c/kWh).
This page contains 201 words.
Regulation and Rates for Electricity article
Read the rest of this article.
This article contains 1,596 words
(approx. 5 pages at 300 words per page).
Order our Public utility Article
