The electric utility industry has turned the corner away from monopoly regulation and into the competitive marketplace. No big surprise. Since the late 1970s, consumers have faced increasing sticker shock. In addition, customers want the same choices over electricity purchases that they have with other products. OK, so how do you disassemble a vertically integrated utility system where access to information product and price is tightly controlled? The answer: Carefully! You
begin by developing independence, comparability, and pricing transparency.
For one group of power marketers, municipal utilities, federal power agencies, and investor-owned utilities (em 18 players in all (em the answer to price transparency comes through the development and distribution of a market price index. These market participants who collaborated on the index represent one-third of the generation in the region. The index will enable electricity to be traded like a commodity, as are corn, oil, and natural gas. This effort should result in a more efficient market and better use of generation resources as well as the development of risk-management tools. The index will be based on the prices and quantities contained in actual transactions and will be published by Dow Jones beginning in March 1995.
What is it For?