Despite all the talk, despite keen interest in certain industry sectors, and despite federal legislation, increased competition in the electric power industry is far from certain. Unlike other deregulated industries, electric power is primarily regulated by state public utility commissions (PUCs) (em not by a federal regulatory agency. The debate over the values and benefits of competition as opposed to regulation will have to take place over and over again. Indeed, to achieve real competition in the electric power industry (em and the natural gas industry (em state regulators and legislators will have to deal with the historic regulatory compact, which has existed since early in the century and sets the relationships between consumers, public utilities, and the government.
It was, perhaps, the proliferation of nonutility generators (NUGs) pursuant to the Public Utility Regulatory Policies Act of 1978 that provided one of the stronger motivations for increased competition in the electric power industry. These qualified facilities (QFs) and independent power producers (IPPs), as they are known in industry jargon, were built based on the energy economics of the early to mid-1980s and forecasts of ever-increasing energy prices. Those forecasts have changed. As a result, many QF and IPP contracts are being reexamined and renegotiated.
In 1992, Congress reacted to the growing economic tension in the electric power industry by passing the Energy Policy Act (EPAct). EPAct opened the door to the wholesale wheeling of electricity. This action, combined with the creation of a new category of NUG (em the exempt wholesale generator (em makes the implementation of EPAct the greatest force for change in the electric power industry.