Civil Engineering Reference
In-Depth Information
10 cents per kWh, and the society at large would gain 5 cents (utility will
save 10 cents but the self-generator would spend 5 cents). This example
highlights the basic difficulty in accounting the benefits of renewable power.
With such common situations, the impact of the electric utility restructuring
on the renewable would depend on how fairly it is treated in defining some
of the costs of both the conventional and renewable electricity.
16.6.1
Energy Policy Act of 1992
By passing the Energy Policy Act of 1992, Congress encouraged even greater
wholesale competition by reducing the market barriers for independent
generators interested in selling electrical power. This act permits wholesale
customers to have a choice of generators and obliges utilities to wheel power
across their transmission lines at the same cost that they would charge to all
others, including themselves. For effective implementation of the act, the
utilities are required to break up the generation, transmission, and distribu-
tion businesses in separate companies. One will own the generating plants
and the other will own the wires. In the past, electricity has been sold as a
delivered product. The new restructuring merely unbundles the product
price and the delivery charge, with the wires owned and operated separately
as common carriers obligated to charge the same rate to all customers.
The new law has separated the power industry in two parts: (1) the gen-
eration and/or sale of electricity by licensed power supplier, and (2) the
delivery of electricity to the consumers by regulated companies.
In the new retail competition, all customers will choose their energy sup-
pliers, each supplier having direct open access to the transmission and dis-
tribution wires. The concept is similar to what happened to the telephone
industry more than a decade ago. The idea is as old as the American free
enterprise, that is the open unrestricted competition at the consumer level.
The United Kingdom, Chile, Norway, and parts of Australia have systems
similar to that presently taking effect in the U.S.A.
This is a major restructuring of the electrical utility industry in the U.S.A.
since the beginning of the industry some 100 years ago. The uncertainty and
skepticism around the EPAct of 1992 is, therefore, causing significant confu-
sion and uncertainties of new investments in this industry.
Like PURPA, the implementation of the EPAct of 1992 is also left to indi-
vidual states. The states with relatively higher energy cost (12 to 16 cents per
kWh), such as California, Illinois, Massachussetts, Maine, New Hampshire,
and Pennsylvania, have active pilot programs underway. In 1996, NH started
a pilot project in which 16,500 customers were chosen randomly and given
to choose their electricity producer. This 2-year experiment will lead to full
implementation by the end of 1998. In late 1997, Pennsylvania became the
largest state in the U.S.A. to implement an extensive program of competitive
electric power sources. The state, home of 12 million people, has licensed 47
companies to sell power to public. Presently, there are four major established
