Another major restructuring issue is the treatment of renewable energy. Most of the federal legislative proposals, for example, have components mandating that a certain percentage of power generated by utilities in a restructured market be from renewable energy sources, such as wind, solar, and hydro. The legislation submitted to Congress by the Clinton administration requires establishment by 2010 of a Renewable Energy Portfolio Standard of 5.5 percent of power generated. Several states, including California, have similar provisions in their state restructuring laws. In this scenario, a competing utility identifies the current utility's largest customers and entices them to switch through significantly lower cost proposals.
Economies of scale make large industrial customers most profitable for energy providers.
The subsequent customer loss results in a higher cost per kilowatt-hour to the current utility, forcing it to increase its rates for residential users.