Enron Mail

Subject:Electricity restructuring
Date:Mon, 4 Jun 2001 13:35:09 -0700 (PDT)

FYI. A paper prepared for the 20th Annual Conference, Center for Research=
in Regulated Industries, Rutgers University, May 25, 2001, is available on=
my web page at:http://www.ksg.harvard.edu/whogan=20
or www.whogan.com .
Abstract: Electricity systems present complicated challenges for public po=
licy. In many respects these challenges are similar to those in other netw=
ork industries in providing a balance between regulation and markets, publi=
c investment and private risk taking, coordination and competition. As wit=
h other such industries, naturally monopoly elements interact with potentia=
lly competitive services, but electricity has some unusual features that de=
fy simple analogy to other network industries. Following a reversal of a l=
ong-term decline in real electricity prices, the last two decades of the tw=
entieth century were for the United States a time of reform, reaction, and =
reforms of reforms in electricity systems, moving slowly towards greater re=
liance on competition and markets. Changing technology, new entrants in the=
generation market, and a legislative mandate to provide access to the esse=
ntial transmission facility accelerated a process that required major innov=
ations in institutions and operations. Complete laissez faire competition i=
s not possible, and the details of an efficient competitive electricity mar=
ket are neither obvious nor easy to put in place. The benefits of reform ma=
y be substantial, but they require careful attention to market design. A re=
view of the past identifies some choices on the road ahead.
William W. Hogan
John F. Kennedy School of Government
Harvard University
79 John F. Kennedy Street
Cambridge, MA 02138
617-495-1317 (o)
617-495-1635 (f)
web page: www.whogan.com=20