| Average Revenue from Electricity Sales to All Retail Consumers by State, 1996 (cents per kilowatthour) |
Several factors have motivated the changes occurring in the electric power industry. They are advancements in power-generating technology, legislative and regulatory mandates, and regional electricity price variations.
Advancements in power-generating technology: New advanced generators are cleaner and use less fuel. Technological advancements have enabled nonutilities (as well as utilities) to generate electricity at lower cost than utilities that use older fossil-fueled or nuclear-fueled steam-electric technologies. The new generators can be built and put into operation quickly, sometimes as an alternative to utility capacity at existing central station plants. Legislative and regulatory mandates: The Public Utility Regulatory Policies Act of 1978 (PURPA) stipulated that electric utilities had to interconnect with and buy, at the utilities' avoided cost, capacity and energy offered by any nonutility facility meeting certain criteria established by the Federal Energy Regulatory Commission (FERC). (See further explanation of PURPA in the PURPA Specifications section.) The Energy Policy Act of 1992 (EPACT) opened access to transmission networks and exempted certain nonutilities from the restrictions of the Public Utility Holding Company Act of 1935 (PUHCA). PUHCA broke up massive interstate holding companies and required them to divest their holdings until each became a single consolidated system serving a circumscribed geographic area. PUHCA also permitted holding companies to engage only in business that was essential and appropriate for the operation of a single integrated utility, thereby practically eliminating the participation of nonutilities in wholesale electric power. (See the section on PUHCA Goals and Specifications for a further explanation of PUHCA and the section on the Repeal of PURPA and PUHCA for a discussion of the arguments for and against the repeal of PURPA and PUHCA.) In 1996, FERC issued Order 888 which opened transmission access to non- utilities, thereby establishing wholesale competition, and Order 889 which requires utilities to establish electronic systems to share information about available transmission capacity. (See the section on Regulatory Changes by the Federal Energy Regulatory Commission for further details on these Orders.) Regional electricity price variations across the Nation:Large industrial consumers, located in States where electricity prices are significantly higher than those in other States, have used their considerable influence to convince State legislators and regulators to take actions that will lower electricity prices.
In 1996, the average revenue from electricity sales to industrial consumers ranged from 2.7 cents per kilowatthour (kWh) in Idaho to 10.0 cents per kWh in Hawaii; average revenue nationwide was 4.6 cents per kWh. Average revenue from electricity sales to all consumers (i.e., residential, commercial, industrial, and other) ranged from 4.0 cents per kWh in Idaho to 12.1 cents per kWh in Hawaii and averaged 6.9 cents per kWh nationwide.| Average Revenue from Electricity Sales to All Retail Consumers by State, 1996 (cents per kilowatthour) |