Boosted by the momentum gained through the 1980s and 1990s withgrowing regional wholesale electricity trading markets inCalifornia, New York, Pennsylvania, New Jersey, Maryland and theNew England states, more U.S. regions now are open to electricitycompetition, according to a report by the Energy InformationAdministration.

“The Changing Structure of the Electric Power Industry 2000: AnUpdate” details how markets will develop in other regions, spurredby the Federal Energy Regulatory Commission’s (FERC’s) recent Order2000. The order requires electric utilities to form regionaltransmission organizations.

As of July 2000, EIA said that 24 states and the District ofColumbia had approved the introduction of retail competition forelectricity. The result: consumers in many states now may choosetheir electricity provider.

California and the Northeast, where the cost of electricity ishigh, are first in allowing retail competition. Other states, suchas Kentucky and Idaho, have not been nudged toward competitionbecause their electricity rates have remained low.

In response to increasing competition in the industry, manyinvestor-owned utilities, or IOUs, are selling some or all of theirpower plants. Over the past three years, IOUs have divested or arein the process of divesting 156.6 gigawatts of power generationcapactiy, representing nearly 22% of the total U.S. electricgeneration capacity.

In the past eight years, 35 mergers involving electric utilitieshave been completed, and 12 mergers are pending approval. Thistrend shows that many electric utilities are becoming larger, bothin terms of ownership and generation capacity. By the end of 2000,EIA estimates that the 10 largest IOUs will own nearly 51% ofIOU-held generation capacity and the 20 largest will own nearly72%.

Along with industry mergers, there are more growth opportunitiesin the natural gas industry, with electric utilities merging, andcontributing to a convergence of industries. In the last threeyears, EIA said that 23 convergence mergers have been completed orare nearly completed.

Because of divestitures and the general growth of independentpower producers (IPPs), the role of the IOU as the traditionalelectric power provider is now going to the IPPs. While the numberof IOUs has decreased to 239 in 1998 from 261 in 1992, IPPs haveincreased: to 1,954 in 1998 compared with 1,792 in 1992.

The EIA report is available on their website.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.