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Regulatory restructuring survey

Issue 4 and Volume 99.

Regulatory restructuring survey

The OTransformation of the Electric Industry: A Case Study of California,O a 300-page study by Crossborder Services Inc., analyzes the likely results and effects of ongoing regulatory restructuring on utilities, independent power generators, consumers and other stakeholders. The report concluded that: transition cost determination and recovery is the fundamental policy issue that will determine the economic impacts and success of restructuring; transmission pricing and access issues have received less attention than they deserve in the California context, although FERC has focused on them; there is fundamental uncertainty and probably inherent conflict between federal and state regulators concerning jurisdiction over the electricity market; and the effort in California and nationally to achieve environmental benefits, promote renewable energy development, and increase demand-side efficiency through utility programs is incompatible with the utilities? intended new roles as competitive players in an open-entry generation market.

The study includes chapters addressing independent power?s future role and economics, the consistency of restructuring with regulatory trends such as performance-based rates, the reaction of financial markets, the bulk power imports role, transmission pricing issues, probably commodity market costs, transmission rates and consumer costs, and the likelihood of avoiding costs through municipalization or self-generation. Analysis of the price of power wheeled from new gas-fired generation outside California compared to power from new local gas-fired generation is included.

This report followed an earlier analysis of the relationship of the electricity industry transformation to the demand-side management. For a copy of the report contact John McKain, Crossborder Services, 1225 Nineteenth Street NW, Suite 800, Washington, D.C. 20036, Phone: (202) 296-6801, Fax: (202) 822-0109.