By Kenneth W. Costello, Robert E. Burns, and Youssef HegazyThe electric power industry is next in line for dramatic change. Competition has edged into individual markets, particularly the bulk-power market. This move toward competition has provoked debate in several states over the merits of retail wheeling. Specifically, should retail customers have the right to purchase their power requirements from sources other than the local utility? Many states have addressed the issue in different forums, at different levels of intensity. No state has yet enacted broad legislation, either requiring or granting authority to a state public utility commission (PUC) to order retail wheeling. But that day will come.
What's at Stake?
Proponents of retail wheeling argue that current inefficiencies in the electric power industry can only be eliminated or significantly diminished by competition at the retail level. This camp includes industrial consumers, nonutility power producers, and market-liberal economists. Of course, industrial customers and nonutility generators see retail wheeling as a means of advancing their economic interests, regardless of the cost to the public interest or aggregated economic welfare.
The opposition naturally includes most electric utilities, who consider retail wheeling a zero- or negative-sum game in which some industrial customers benefit at the expense of utility shareholders. This view is shared by the financial community, which foresees only adverse impacts from retail wheeling on utility creditworthiness. Also opposed are small-consumer groups and conservationists/environmentalists. They fear that the financial pressures will
have negative consequences for consumers and the environment.