Thursday, July 17, 2008

ESIs of the US, Canada and Australia

The Electricity Supply Industries of the United States, Canada, and Australia are similar in many ways. All three are large federally constituted countries, with a combination of federal and state or provincial legislation and control. The federal governments generally establish broad policies and then it is the responsibility of the state or provincial government to implement these.

The Electricity Supply Industry in the USA is predominantly investor-owned, so privatisation has not been a pressing issue. There are some large federal and state-owned utilities, and a large number of municipally-owned distribution companies, many of them small.

Electricity Market Deregulation has had a mixed history in the US. Partly because of the disaster in California a number of states have put electricity market deregulation plans on hold. Among the 24 states that have enacted electricity deregulation plans, results are mixed and some of these are now delaying implementation or even reversing the process. Rising prices, spiralling demand and limited supply in some areas have raised questions about the viability of electricity market deregulation.

Pennsylvania’s deregulation experiment, enacted in 1998, has been a success and is cited as a model for electricity market deregulation. The story is very different in California, which in 1996 became one of the first states to enact an electricity restructuring plan. Not long after the plan went into effect, price increases began to erode public support for deregulation. Criticism of deregulation intensified in the summer of 2000, when limited power supplies and increasing demand caused the wholesale price of power to soar throughout the state and in some areas the retail price of power fluctuated directly with the wholesale market, causing electric bills to double. The problem intensified in the winter of 2000/01, as the state's electric utilities faced a financial crisis and consumers were met with electricity shortages and skyrocketing prices.

Canada and Australia are very mixed markets. Both countries have a number of large, vertically integrated Crown or State / Province owned companies which dominate the regional industry. They also have many privately-owned companies in some states. Market deregulation in Canada was first introduced in the province of Alberta and Ontario followed later. Ontario has been much influenced by events in California and in response to price rises after deregulation the government imposed retail price caps. The other provinces of Canada are all watching the situation and biding their time. Electricity market developments in Australia have been largely dependent on geography.

The restructuring of the Australian Electricity Supply Industry has now been proceeding for 14 years since the Electricity Supply Industry itself set up an industry reform working group during 1990. Originally, in some Australian states (e.g. Victoria, South Australia and Tasmania) the four Electricity Supply Industry functions were carried out within a single, vertically-integrated, monopoly business. In other states (e.g. New South Wales and Queensland) generation and transmission were contained in a single monopoly business, while distribution and retail supply were carried out by a number of businesses, each with a monopoly franchise covering a specified geographical area within the state. A major objective of Electricity Supply Industry restructuring in Australia has been to unbundle the four Electricity Supply Industry functions into separate businesses. Several competing generation businesses have been established in each state, as has a single monopoly transmission business, while the geographical monopoly franchises for distribution have been retained in each state. In some states, the number of franchises, and therefore of distribution businesses, has been reduced.

A vigorous wholesale market, the National Electricity Market (NEM) has been established and operates in the interconnected states of New South Wales, Victoria, Queensland, South Australia, the Australian Capital Territory and Tasmania. Western Australia and Northern territories will always be excluded because of the lack of interconnections and the vast distances covered.


Anonymous Selma said...

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Blogger toddjames said...

In an effort to keep electric prices at a minumum, current pricing in deregulated areas continue to rise. My client, Low Cost Power provies Electric energy to consumers and businesses at far lower prices easing the burden in todays economy.

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