Resource Planning and Procurement in Evolving Electricity Markets
Prepared for the Edison Electric Institute
During the 1990’s, the U.S. government and many states restructured the electric industry, unbundling what had been vertically integrated utilities and introducing competition to wholesale power supply and to the provision of retail generation service. The wires businesses of transmission and distribution, as well as “safety-net” or “provider of last resort” generation services, continued to be provided by utilities regulated by the state commissions and the Federal Energy Regulatory Commission (“FERC”). To effect wholesale restructuring, FERC unbundled transmission from generation, licensed exempt wholesale generators, allowed market-based rates for the sales of bulk power in competitive markets, and pursued the development of large, regional open access transmission systems with competitive forward and spot markets. Retail restructuring, which is the current policy in 18 states and the District of Columbia, opened up retail supply to competition and generation service innovations, such as price risk management, unregulated “green” power offers, and convergence with natural gas and telephony services.
