1st Edition

Alternating Currents Electricity Markets and Public Policy

    Many states within the U.S., and many countries across the world, are opening their electicity markets to competition. Many others are uncertain about their plans. These differences emphasize the complexities involved in the technology and regulatory structure of the electricity industry--an industry for which the introduction of market competition has been notoriously difficult. In response to these challenges, Alternating Currents provides a timely overview and analysis of the concerns facing industry regulators, legislators, and others as they consider whether, when, and how to open electricity markets. Authors Brennan, Palmer, and Martinez offer background on the history of regulatory policy and the technology for producing and delivering electric power. They then provide insights into the policy debates and economic issues involved in eleven important topics, including industry structure, system integrity and reliability, the mitigation of market power, and environmental protection. Alternating Currents describes the recent events leading to the demise of retail competition in California with the intent on drawing lessons for the future. In the end, the authors offer their perspective about what makes electricity a unique resource and how those factors make the potential conflict between competition and reliability the most pressing of the long-term concerns about the transformation of the electric power industry.

    Preface Introduction 1. Issues in Restructuring the Electricity Industry Part I: How the Industry Got Here 2. Understand the Electricity Industry 3. From Regulation to Competition 4. International and U.S. Restructuring Experiences 5. The California Experience Part II: Current Policy Issues 6. Competition in Energy, Regulation of Wires 7. Vertical Restructuring 8. Regulating Rates for Transmission and Distribution 9. Encouraging Competition 10. Balancing Loads and Dispatching Power 11. Ensuring Reliability in a Competitive Market 12. State and Federal Roles 13. Public Power's Role after Restructuring 14. Covering Stranded Costs 15. Restructuring and Environmental Protection 16. Public Purpose Programs in a Competitive Market Part III: The Future 17. Prospects for Restructuring Supplemental Reading Index


    Timothy J. Brennan is a professor of policy sciences and economics at the University of Maryland, Baltimore County and a senior fellow at Resources for the Future (RFF). Karen L. Palmer is a senior fellow at RFF. Both Brennan and Palmer are coauthors of A Shock to the System: Restructuring America's Electricity Industry (1996). Salvador A. Martinez is a Ph.D. student in the Department of Economics at the University of Florida.

    'An even better primer than Shock . . . excellent, balanced description of California Energy crisis. The best available introduction to electricity marketing restructuring.' Regulation 'This book belongs on the shelf of any stakeholder in the restructuring debate - and every journalist who reports on it.' Electricity Daily