In 1992, the federal government deregulated the wholesale power market and by 1996, states were opening their retail markets to competition. Utilities that had been vertically integrated, owning their own generating plants, transmission lines and distribution systems, were encouraged to sell their generating plants, many of which wound up under the control of a relatively few owners who then contracted to sell their output back to the very same utilities from which they d been purchased. Originally priced at fairly attractive levels, many of those contracts are now nearing their termination dates. Typically, new rates are much higher. It s assumed that those higher costs will ultimately be passed along to retail customers.
Higher prices aren t the only concern, however.
Reliability is at issue, too, particularly in areas where demand for electricity is perilously close to outpacing supply. New York is bracing itself for a long, hot and possibly dark summer. And in addition to all its other worries, California s transmission system is strained, as well. Rural areas generally don t, particularly those served by electric cooperatives. Sioux Valley Southwestern Electric customers get a blend of power, about half from Basin Electric s coal-fired plants in North Dakota and Wyoming, the remainder from the federal government s Missouri River hydroelectric generating plants.