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

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Figure ES1. Average Revenue per Kilowatthour for All Sectors by State, 1998 x CA HI 11.56 9.03 WA 4.03 OR 4.90 NV 5.76 U.S. Total Average Revenue per kWh in 1998 was 6.74 Cents ID 4.02 UT 5.16 AZ 7.33 MT 4.80 AK 9.97 WY 4.31 CO 5.95 NM 6.78 ND 5.70 SD 6.26 NE 5.30 KS 6.28 MN 5.71 WI 5.44 IA 6.04 MO 6.08 11.93 9.83 MA 9.59 10.30 IN OH 10.17 6.88 5.34 6.38 WV 5.07 VA 5.88 6.99 4.16 KY OK 5.43 TX AR 5.78 LA 5.62 MS 6.40 5.98 5.56 6.45 5.53 6.07 5.78 FL 7.01 AL IL 7.46 NH ME VT 9.75 NY 10.71 MI RI 9.58 7.09 CT PA 7.86 NJ DE MD DC NC 7.41 TN GA SC Cents per kWh 0-4.99 5.00-5.99 6.00-6.99 Over 7.00 kWh = Kilowatthour. Note: The average revenue per kilowatthour of electricity sold is calculated by dividing revenue by sales. Sales in deregulated retail electricity markets are not included. Source: Energy Information Administration, Form EIA-861, “Annual Electric Utility Report.” 24 States and the District of Columbia had enacted legislation or passed regulatory orders to restructure the electric power industry (Figure ES2). While most of the States have been active in restructuring their own jurisdictions, several bills designed to provide a single Federal framework for wholesale and retail competition have been introduced into the U.S. Congress. These bills address myriad restructuring issues such as reliability, reform of Federal power marketing administrations, a public benefits fund, tax issues, and renewable energy portfolio standards. Extensive hearings and debates have been held to understand the interests and concerns of all parties involved in the industry, and reaching consensus has been an imposing pursuit. The recent price spikes in California will certainly be a topic of discussion as the restructuring debate moves forward. Retail prices in San Diego have tripled in some cases over the summer of 2000 and there have been blackouts in the San Francisco Bay area. Any discussion surrounding new bills will most certainly address mitigation of these price spikes and supply curtailments. In all likelihood, Congress will be involved in these activities for a number of months before any comprehensive restructuring legislation will be passed. Mergers, acquisitions, and divestitures of power plants have become widespread as investor-owned utilities (IOUs) seek to improve their positions in the increasingly competitive electric power industry. Since 1992, IOUs have been involved in 35 mergers, and an additional 12 mergers are pending approval. One effect of these mergers is that the size of IOUs is increasing. In 1992, the 10 largest IOUs owned 36 percent of total IOU-held generation capacity, and the 20 largest IOUs owned 58 percent of IOU-held generation capacity. By the end of 2000, the 10 largest IOUs will own an estimated 51 percent of IOU-held generation capacity, and the 20 largest will own approximately 72 percent. While the size of the largest IOUs is increasing, because of generation divestitures, they generally own a smaller proportion of total generating capacity than in the past. Energy Information Administration/ The Changing Structure of the Electric Power Industry 2000: An Update
Figure ES2. Status of State Electric Utility Deregulation Activity, as of July 2000 Restructuring Legislation Enacted Comprehensive Regulatory Order Issued Legislation/Orders Pending Commission or Legislative Investigation Ongoing No Activity Source: Energy Information Administration. In addition to mergers within the electricity industry, IOUs�seeing growth opportunities in the natural gas industry�are merging with or acquiring natural gas companies, contributing to what is referred to as convergence of the two industries. In the last 3 years, 23 convergence mergers have been completed or are pending. Influenced predominantly by State-level electricity industry restructuring programs that emphasize the unbundling of generation from transmission and distribution, and in some cases by a desire to exit the competitive power generation business, IOUs are divesting power generation assets in unprecedented numbers. Since late 1997, IOUs collectively have divested or are in the process of divesting 156.5 gigawatts of power generation capacity, representing about 22 percent of total U.S. electric utility generation capacity. Divestiture means that the IOU will either sell its generation capacity to another company or transfer the generation capacity to an unregulated subsidiary within its own holding company structure. As a result of mergers and divestitures during the past few years, the organizational structure of the electric power industry (i.e., the numbers and roles of the industry participants) is changing. The traditional role of the electric utility as a provider of electric power is giving way to the expanding role of nonutilities as providers of electric power. An analysis of electric power data collected by the Energy Information Administration for the period 1992 through 1998 offers the following insights: � The number of IOUs has decreased by 8 percent (261 in 1992 vs. 239 in 1998), while the number of nonutilities generating electricity has increased by 9 percent (1,792 in 1992 vs. 1,954 in 1998). � Nonutilities are expanding and buying utilitydivested generation assets, causing their net generation to increase by 42 percent (286 million megawatthours in 1992 vs. 406 million megawatthours in 1998) and their nameplate capacity to increase by 73 percent (57 thousand megawatts in 1992 vs. 98 thousand megawatts in 1998). Nonutility capacity and generation will increase even more as they acquire additional utility-divested generation assets over the next few years. � The nonutility share of net generation rose from 9 percent (286 million megawatthours) in 1992 to 11 percent (406 million megawatthours) in 1998. � Utilities have historically dominated the addition of new capacity. However, utilities are adding less capacity, while nonutility additions to capacity have been increasing at an average annual rate of nearly 7 percent since 1992. In 1998 alone, the nonutility share of additions to capacity was 82 percent (5,396 megawatts) with utilities adding 1,185 megawatts or 18 percent. Since 1998, it is expected that these trends have continued. Energy Information Administration/ The Changing Structure of the Electric Power Industry 2000: An Update xi
Page 1 and 2: DOE/EIA-0562(00) Distribution Categ
Page 3 and 4: Section 205(a)(2) of the Department
Page 5 and 6: Contents (Continued) Page Appendice
Page 7: The U.S. electric power industry, t
Page 11 and 12: egulation coexist. Chapter 2 presen
Page 13 and 14: 2. Historical Overview of the Elect
Page 15 and 16: Table 1. Percentage Change Between
Page 17 and 18: Generation of electricity 3. The U.
Page 19 and 20: Figure 3. Prime Movers of Electrici
Page 21 and 22: California’s tight restrictions o
Page 23 and 24: follow the directions of NERC. The
Page 25 and 26: Table 2. Major Characteristics of U
Page 27 and 28: Table 4. Energy Supply Participants
Page 29 and 30: from other utilities and market lar
Page 31 and 32: Figure 13. Shares of Nonutility Nam
Page 33 and 34: Figure 15. Total Utility and Nonuti
Page 35 and 36: Figure 17. Electric Utility Wholesa
Page 37 and 38: 33 PUHCA and PURPA are now being ta
Page 39 and 40: (2) such holding company is predomi
Page 41 and 42: a new avoided cost for purchased po
Page 43 and 44: Major Federal Legislation Affecting
Page 45 and 46: a SEPA markets power in West Virgin
Page 47 and 48: Part II: The U.S. Electric Power In
Page 49 and 50: Figure 23. Status of State Electric
Page 51 and 52: Figure 25. Average Revenue per Kilo
Page 53 and 54: 6. Federal Legislative Initiatives
Page 55 and 56: for establishing the reliability st
Page 57 and 58: Those who are against outright repe
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The Comprehensive Electricity Compe
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Table 8. Proposed Legislation Influ
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62 Table 9. Overview of the Federal
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on the same basis and under the sam
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and a half. 86 The overwhelming maj
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transmission system, and achieve fu
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70 Table 12. Summary of Major Provi
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72 Table 12. Summary of Major Provi
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company (Transco) model. With the I
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Table 13. Selected Information on I
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78 � Recently, � In FERC accept
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approved more than 850 applications
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up, and, at the same time, deregula
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is publicly available. The PX then
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companies were required to report t
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price that each utility pays for su
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Kentucky In December 1999, Kentucky
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92 Energy Information Administratio
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Figure 29. Concentration of Ownersh
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100 Energy Information Administrati
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Table 17. Overview of Strategic Ben
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Table 18. Government Agencies Respo
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competition. Some States have passe
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expected as some of the pending mer
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Appendix A History of the U.S. Elec
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areas and towns with populations un
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New technology introduced during th
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From 1980 through 1984, net electri
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Appendix C Pending Federal Restruct
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� Establishes a fund within the D
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mation and that prohibit discrimina
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dioxide, mercury, and sulfate fine
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H.R. 2944 Electricity Competition a
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� Prescribes specifics regarding
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if conflict arises. Authorizes TVA
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� Directs the Department of Energ
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Appendix D Electric Power Industry
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on a number of subject areas, inclu
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Table D1. Electric Power Industry S
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