First came the Pool, with its faults and virtues.
Now comes a wave of troubling takeovers.
What happens when retail supply opens up?
Much of the pressure to reform the electricity supply industry in the United States assumes that the United Kingdom's electricity experiment offers a proven model. Close examination, however, reveals that competition in generation is more apparent than real. Competition in supply (the retail segment) is not scheduled for the vast majority of consumers before 1998, and the industry is rapidly reintegrating and concentrating into a structure that may not be competitive.1
Six years of experience in Britain have demonstrated that the form of regulation, whether rate-of-return or incentive, is not the key factor. The promise that incentive regulation would end up simpler, cheaper, and a less dominating influence than rate-of-return regulation has not come true. In fact, it is now apparent that effective regulation of monopolies requires a regulatory body with the commercial know-how to understand a utility's cost base well enough to identify where costs can be squeezed (em and with the political power to enforce its will. High utility profits and the ease with which utilities still hoodwink the Regulator suggest that these conditions have yet to be fulfilled in Britain.
Less than Ideal
The Government's reform proposals assumed a four-tiered structure for the electricity supply industry:
s Transmission (high-voltage lines)
s Distribution (lines of 132 kV or less)
s Supply (the purchase of electricity in bulk and its resale to final consumers, including meter reading and billing).