DEREGULATION OF THE ELECTRIC UTILITY INDUSTRY

This research paper discusses various legal aspects of the deregulation of the electric power industry in the United States, especially the legal constraints on the power of government, state and federal, to regulate the industry and the rights of the electric utilities (EUs) to recover through the public rate-making process costs and commitments undertaken by them before deregulation becomes fully effective. Generally, the regulatory power of state governments stems from their police powers to regulate an industry which affects the public interest. Constitutional limitations on that power under the Fifth Amendment and the Contract Clause are relatively weak: however, the industry can be expected to use its considerable leverage with state public utility commissions (PUCs) to work out transitional arrangements which will enable many of them to maintain their investment base and to cover their costs of capital as they adapt to a more competitive marketplace.

From the standpoint of the public interest and the consuming public, some such accommodation is reasonable and equitable but conflict between the utilities and regulators will occur in certain areas which may result in the failure of some marginal utilities. To the extent deregulation fails to achieve its objectives, state governments have the power to re-regulate the industry but only at a high cost to all parties concerned.

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ts, the Ohio Supreme Court said in Cleveland Electric Illuminating Co. v. Public Utilities Commission of Ohio, 4 Ohio St.3d 107, 443 N.E.2d 746 (1983), "the Constitution no longer provides any special protection for utility investors." As a result of these denials, the electric utility industry wrote off approximately $22.4 billion in nuclear plant costs, which represented 17 percent of the book value of their investment in such plants. Deregulation and Its Consequences Deregulation of the electric utility industry, which is underway in many states begins at the wholesale power generating level and will encompass eventually the transmission and distribution or retail level. It means essentially the introduction of competitive market forces as the governing factor in setting the rates (prices) and the making of investment decisions of the EUs. Factors leading to deregulation include: (1) a concern which developed in the late 1970s and 1980s that the industry was wasting a good deal of energy. As a result of the Public Utility Regulatory Policy Act (PURPA), Pub. L. No. 95-617, 92 Stat. 3117 (1978) (codified in scattered sections of 16 U.S.C.), and the 1992 Energy Policy Act, Pub. L. No. 102-486, 606 Stat. 2776 (1992), the rapid
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Some common words found in the essay are:
Baumol Sidak, Co Barasch, Policy Act, Supreme Court, Stranded Costs, Contract Clause, Gellhorn Pierce, IPPs Congress, UTILITY INDUSTRY, Pierce NAPS, public utilities, utility industry, public utility, supreme court, contract clause, electric utility, electric utility industry, public utilities fortnightly, utilities fortnightly, policy act, power production, public service, codified scattered sections, scattered sections 16, sections 16 usc,
Approximate Word count = 3301
Approximate Pages = 13 (250 words per page)

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