Electricity: The Road Toward Restructuring Page: 4 of 19
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IB10006
MOST RECENT DEVELOPMENTS
On April 30, 2003, the Senate Energy and Natural Resources Committee voted to report
comprehensive energy legislation, S. 14. On July 29, 2003, Senator Domenici proposed
S.Amdt 1412, which would have been a global replacement to the electricity title of S. 14 as
introduced in the Senate. This Amendment was withdrawn on July 31, 2003. The Senate
substituted the language of H.R. 4 that passed the Senate in the 107th Congress and passed
H.R. 6 on July 31, 2003. On April 30, 2003, the Department of Energy issued its report to
Congress on Federal Energy Regulatory Commission's (FERC) proposed Standard Market
Design (SMD) proposal. FERC issued a White Paper on its SMD proposal on April 28,
2003. On April 2, 2003, the House Energy and Commerce Committee reported unnumbered
energy legislation by a vote of 36-17; it, unlike omnibus energy legislation debated in the
107th Congress, included provisions pertaining to restructuring of the electric utility industry.
This was merged into H.R. 6, introduced on April 7, 2003, and passed on April 11, 2003 by
a vote of 247-175. On March 5, 2003, and March 13, 2003, the House Energy and
Commerce Committee held hearings on draft comprehensive energy legislation.
On July 31, 2002, FERC issued a Notice of Proposed Rulemaking (NOPR) on Standard
Market Design (Docket No. RM01-12-000)
[http://www.ferc.gov/Electric/RTO/Mrkt-Strct-comments/nopr/Web-NOPR.pdf]. The
proposed rulemaking would create a new tariff under which transmission owners would be
required to turn over operation of their transmission systems to unaffiliated independent
transmission providers.(See also the CRS Electronic Briefing Book on electricity
restructuring at [http://www.congress.gov/brbk/html/ebele1.shtml].)
BACKGROUND AND ANALYSIS
Historically, electricity service has been defined as a natural monopoly, meaning that
the industry has (1) an inherent tendency toward declining long-term costs, (2) high threshold
investment, and (3) technological conditions that limit the number of potential entrants. In
addition, many regulators have considered unified control of generation, transmission, and
distribution as the most efficient means of providing service. As a result, most people (about
75%) are currently served by a vertically integrated, investor-owned utility.As the electric utility industry has evolved, however, there has been a growing belief
that the historic classification of electric utilities as natural monopolies has been overtaken
by events and that market forces can and should replace some of the traditional economic
regulatory structure. For example, the existence of utilities that do not own all of their
generating facilities, primarily cooperatives and publicly owned utilities, has provided
evidence that vertical integration has not been necessary for providing efficient electric
service. (For additional information on Public Power, see also the CRS Electronic Briefing
Book on electricity restructuring at [http://www.congress.gov/brbk/html/ebelel2.html].)
Moreover, recent changes in electric utility regulation and improved technologies have
allowed additional generating capacity to be provided by independent firms rather than
utilities.CRS-1
08-12-03
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Abel, Amy & Parker, Larry. Electricity: The Road Toward Restructuring, report, August 12, 2003; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metacrs4441/m1/4/: accessed April 27, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.