The Changing Structure of the Electric Power Industry 2000: An ... - EIA

emains to provide their State’s consumers with reliable,
reasonably and fairly priced electric power.
23 Nonutilities generate but do not transmit or distribute electricity.
24 As earlier stated, EPACT provided a Federal mandate to open up the national electricity transmission system to wholesale suppliers,
marking the beginning of competition in the electric power industry, and was the impetus for significant structural changes. In 1996, the
Federal Energy Regulatory Commission (FERC) issued its Order 888, which carried out the goal of EPACT. From the 1970s until 1992, little
change had occurred in the industry, either structurally or operationally, with the exception of the creation of nonutility qualifying facilities
brought about by PURPA.
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The Components of Electricity
Supply �� Utilities and Nonutilities
Introduction
This section provides a basic understanding of the infrastructure
of the electric power industry, i.e., the
components that carry out the generation, transmission,
and distribution of electricity. The components consist of
two broad categories of energy providers�utilities and
nonutilities. 23 Their ownership characteristics, their current
role in electricity supply, and how some roles have
shifted since passage of the Energy Policy Act of 1992
(EPACT) 24 are explained in the following sections. In
most cases, the data presented are for 1998, although in
some cases, data for earlier years are compared with
1998 data to show changes.
Utilities
Electric utilities in general are defined as either privately
owned companies or public agencies engaged in the
generation, transmission, and/or distribution of electric
power for public use. Utilities can be further classified
into four subcategories based on ownership�investorowned,
Federally owned, other publicly owned, and
cooperatively owned (Tables 2 and 3).
Under the traditional system, utilities are given a
monopoly franchise over a specific geographic area. In
return for this franchise, the electric utility is regulated
by State and Federal agencies. Some electric utilities
have service territories extending beyond a single county
or parish. Others just serve a municipality or part of
a county. Many counties in the United States are served
by more than a single utility, and some parts of the
country (such as Kossuth County, Iowa and Fillmore
County, Minnesota) have more than 10 electric utilities
operating in a county.
To move electricity among utilities, an extensive system
of high-voltage transmission lines is owned and operated
by the Nation's larger utilities. This transmission
network permits electricity trading between utilities.
Without transmission facilities, electricity could not be
moved from power plants to the thousands of distribution
systems serving millions of consumers of electric
power.
Utilities can also be categorized in a different manner,
i.e., the number of companies that generate, transmit,
and/or distribute electric power. It is interesting to note
that only about 27 percent of the Nation's 3,169 utilities
actually generate electric power. Many electric utilities
(67 percent) are exclusively distribution utilities, purchasing
wholesale power from others to distribute it,
over their own distribution lines, to the ultimate consumer.
These are primarily the utilities owned by State
and local governments and cooperatives. Conversely, all
nonutilities generate power but do not own or operate
transmission or distribution systems (Table 4).
Investor-Owned Utilities
Two basic organizational forms exist among investor-owned
utilities (IOUs). The most prevalent is the
individual corporation. Another common form is the
holding company, in which a parent company is established
to own one or more operating utility companies
that are integrated with one another.
Most of the IOUs sell power at retail rates to several
different classes of consumers and at wholesale rates to
other utilities, including other investor-owned, Federal,
State, and local government utilities, public utility
districts, and rural electric cooperatives (Figure 9). They
also have high-density service areas.
Federal Utilities
There are nine Federal electric utilities in the United
States (Figure 10). They include four operating entities:
the Department of Defense's U.S. Army Corps of Engineers
(USACE), the Department of the Interior's U.S.
Bureau of Reclamation, the Department of the Interior's
U.S. Bureau of Indian Affairs (USBR), and the Department
of State's International Water and Boundary
Commission. These entities operate the Federal hydroelectric
plants.
Also included in this category are four Federal power
marketing administrations (PMAs): the Bonneville
Energy Information Administration/ The Changing Structure of the Electric Power Industry 2000: An Update