Investor-Owned Utilities: Adjusting the Focus

Fortnightly Magazine - October 15 1997
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Throughout the 1990s, investor-owned utilities have redefined the way they do business to position themselves for competition better. The downside of these efforts is higher rates for small customers and employee layoffs.

Today, IOUs are more focused on improved efficiency. IOUs are concentrating on keeping large customers, investing less in their utility systems and retiring debt.

Though IOUs continue to dominate electric generation nationwide (74 percent), electric output has increased by only 8.1 percent since 1990. During the same period, growth in wholesale power purchases by IOUs has risen by more than 74 percent (em topping 900,000 gigawatt-hours in 1996. IOUs spend more annually for bulk power ($34 billion) than fuel ($31 billion). Driven by lower fuel costs (down 12.2 percent since 1990), overall generation O&M costs fell to $20.7 a megawatt-hour in 1996.

Most growth in buying and selling wholesale power and decline in bulk rates is a result of increased activity from power marketers and independent power producers, many of which are IOU affiliates.

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