Merge, consolidate, grow, or spin off?
- National Regulatory Research Institute, Columbus, OH (United States)
The costs and synergies of vertical integration are discussed. Is bigger always better in electric generation? That notion prevailed, beginning around the turn of the century, when costs generally fell as the scale of production grew. The electric industry consolidated as costs and prices declined. Bigger was nearly always better. Today, at the other end of the century, does this view still hold true? Early work on estimating economies of scale suggests that a turnaround occurred at least 20 years ago, predating even the Public Utility Regulatory Policies Act of 1978. In fact, the current clamor for industry restructuring and deregulation may simply mark the end of an old technology-a technology that was a fundamental justification for regulation. Today, one hears requests for electric utility restructuring from regulators and customers at every level, as well as from a sizable number of the large, vertically integrated firms that still dominate the industry. Some proposals would break up the vertically integrated utilities.
- OSTI ID:
- 482406
- Journal Information:
- Fortnightly, Vol. 134, Issue 17; Other Information: PBD: 15 Sep 1996
- Country of Publication:
- United States
- Language:
- English
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