Darryl L. DePriest is the seventh presidentially appointed and Senate-confirmed Chief Counsel for the Office of Advocacy.
Prior to joining the Small Business Administration Office of...
United States Small Business Administration
Office of Advocacy
Electric Utility Restructuring: Issues for Small Business by J.W. Wilson and Associates
1996. 72 p. J.W. Wilson and Associates, Washington, D.C., under contract no. SBA HQ-95-M-1097
The purpose of this study is to examine the issues associated with electric power deregulation and restructuring for their potential impact on small business. Opportunities for customer cost savings are similar to those in other recently deregulated industries such as airlines and other transportation, long distance telephone, and natural gas production.
Scope and Methodology
The researcher provides an overview of the environment for utility industry restructuring, identifies the potential cost savings for small business, compares the "Poolco" and "Direct Access" models for restructuring, reviews several examples of restructuring policies in effect, and presents arguments against permitting electric utilities to recover all of their "stranded costs" in a deregulated environment.
A number of developments have led policymakers to raise questions about potential cost savings that could result from deregulation and restructuring of the electric utility industry, among them:
The potential for cost savings to an individual small business varies, depending in part on the efficiency of the local utility. For some high-cost utilities, the gap between their generation cost and that of currently constructed generating units can be as high as 2 to 3 cents per kilowatt hour. A well-functioning competitive system for electric power could therefore reduce a small business' power costs by 20 to 30 percent or more. While utility costs-and these potential savings-may not represent major amounts for individual small businesses, overall small business utility costs and potential savings are immense.
A debate is under way on the best means to effect a restructuring. In a comparison of the Direct Access and Poolco models, the researcher finds the Direct Access model to be more market-oriented and less regulation-dependent. FERC does not regulate access to local distribution systems: state regulatory commissions do. Thus, the small business community faces a number of challenges in participating in this opportunity, among them:
The process by which this opportunity is developed into a reality for small businesses will require effort and commitment on behalf of the small business community.
The complete report is available from:
National Technical Information Service
5285 Port Royal Road
Springfield, Virginia 22161
(703) 487-4639 (TDD)
Order Number: PB96-162573
Cost: A05 (paper); A01 (microfiche)
*Last Modified 6-11-01