Harsh medicine. [retail wheeling experiment in Michigan and side effects]
Retailing wheeling's harmful side-effects may surface in a Michigan experiment. In the final analysis, the debate over retail wheeling is about whether there will be direct price competition in the electric power industry. Retail wheeling would extend to the electric power market the same freedom of choice among customers that is present elsewhere in the economy. It would provide a mechanism through which competition could enforce an efficient allocation of resources. It also undoubtedly would eliminate most of the huge discrepancies that exist between so many neighboring service areas. It is unlikely that permitting retail wheeling would actually result in much wheeling or loss of load. Utilities will no doubt meet the threat of the loss of load by cutting rates to hold their customers. Hence, the primary effect would be on the pricing of electricity, not the wheeling of power. The retail wheeling experiment under consideration in Michigan can become an important step toward making the utility industry more efficient for the nation and more equitable for ratepayers. Unfortunately, it also is potentially unfair to the utilities involved. A retail wheeling experiment in one state is likely to put those utilities at risk for competitive attack, but is unlikely to give those utilities the countervailing power to use retail wheeling elsewhere to market their power. Fairness and economic efficiency require that retail wheeling exist everywhere, and that is is accessible to utilities as well as non-utilities.
- OSTI ID:
- 6049413
- Journal Information:
- Public Utilities Fortnightly; (United States), Journal Name: Public Utilities Fortnightly; (United States) Vol. 131:14; ISSN PUFNAV; ISSN 0033-3808
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
296000* -- Energy Planning & Policy-- Electric Power
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