Subject: UFTO Note: Update — DOE Task Force on Electric Reliability; new EIA report
Date: Fri, 07 Feb 1997 13:00:12 -0800
From: Ed Beardsworth <edbeards@ufto.com>

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| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 415-328-5670
| Palo Alto CA 94301-3041 fax 415-328-5675
| http://www.ufto.com edbeards@ufto.com
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Update — DOE Task Force on Electric Reliability; new EIA report

The minutes of the January 16 meeting should be made available soon, pending final OK by the task force chairman, Phil Sharp. They will be available on-line–I’ll let you know as soon as I hear from DOE.

Meanwhile, DOE staff are preparing some briefing papers for the Task Force members, and also plan to provide them with copies of a new report from the Energy Information Administration:

“The Changing Structure of the Electric Power Industry: An Update”, DOE/EIA-0562 (96), provides a good summary of the issues at stake and a history of the electric power industry.

It is available through the EIA at (202) 586-8800 (free to “energy producers”, but not to consultants!) or on their web site (http:// www.eia.doe.gov). You can download the complete report (2.5 MB in pdf-Acrobat format), and a summary is available at:

http://www.eia.doe.gov/cneaf/electricity/pub_summaries/eu_stru1_sum/contents.html#N_1_

Here are the first couple of paragraphs of that summary:

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The Changing Structure of the Electric Power Industry: An Update

Electric utilities(1)–one of the largest remaining regulated industries in the United States–are in the process of transition to a competitive market. Traditionally vertically integrated,(2) the industry will in all probability be segmented at least functionally into its three component parts: generation, transmission, and distribution. The proposals and issues are being addressed in Federal and State legislation and are being debated in State regulatory hearings. (View a discription of utilities and nonutilities in the current market structure.)

Change is occurring through the issuance by the Federal Energy Regulatory Commission (FERC) of Orders 888 and 889 (dated April 24, 1996) to encourage wholesale competition. Order 888 addresses the issues of open access to the transmission network and stranded costs. Order 889 requires utilities to establish electronic systems to share information about available transmission capacity. In addition, as of June 30, 1996, 44 States and the District of Columbia (more than 88 percent of the Nation’s regulatory commissions) have started activities related to retail competition in one form or another.(3) Issues such as recovery of stranded costs, divestiture of transmission assets, increased mergers, renewable energy incentives, energy efficiency investments, reliability, and the timing of retail competition are critical due to the degree of importance electricity holds in this country’s economic and social well-being. Legislative proposals on electric power restructuring have been introduced into the U.S. House of Representatives and the U.S. Senate.