Will consumers benefit from new power era?
- Smith Barney, Inc., New York, NY (United States)
- Massachusetts Institute of Technology, Cambridge, MA (United States)
To reliably generate, transmit, and deliver electricity is no easy task. Deregulation, which helped set the stage for the savings and loan debacle, could bring America`s electric utilities system tumbling down. Is the effort worth the risks involved? Leonard S Hyman, senior industry advisor for Smith Barney, Inc., in New York City, and Marija Ilic, senior research scientist at Massachusetts Institute of Technology in Cambridge, Massachusetts, think so. For one thing, the time is right. {open_quotes}Today, small gas turbines generate electricity at a lower cost than many large utility units. As a result, economics of scale in generation, based on large, centralized generating units, no longer drive the industry. However, in an open market, free access to information is essential to ensure fairness and stability. {open_quotes}In such a market, buyers and sellers must know the price of each component of the transaction,{close_quotes} the authors say. In fact, generation of electricity represents only one quarter of the costs and one aspect of the variety of services delivered. Electric utilities, for example, maintain transmission lines, regulate voltage, and respond quickly to meet the needs of customers during peak usage times. These {open_quotes}ancillary,{close_quotes} yet vital, functions will soon be overseen by a committee comprised primarily of stakeholders representing power generators, transmission-line owners, electricity consumers, and environmental groups. {open_quotes}Overall, the system currently under consideration seems to resemble the famous definition of the camel: a horse designed by a committee,{close_quotes} the authors lament. Then why the rush to deregulate? Hyman and Ilic maintain the nation can`t afford not to. {open_quotes}We should not dawdle on the way to deregulation. Each year of delay could cost consumers more than $25 billion,{close_quotes} they conclude.
- OSTI ID:
- 530481
- Journal Information:
- Forum for Applied Research and Public Policy, Vol. 12, Issue 2; Other Information: PBD: Sum 1997
- Country of Publication:
- United States
- Language:
- English
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