Implications of increased competition in the electric industry for industrial customers.

Summary

---

Large industrial users clearly stand to benefit from the increased level of competition now emerging in the electric utilities sector. The situation works in their favor since they will be able to source their electric supplies more competitively. Inevitably, this sourcing system will require the institution of a retail wheeling mechanism that allows industrial users to secure dependable electric supplies at the lowest cost possible. While retail wheeling still meets with a considerable amount of opposition from certain sectors, its implementation seems inevitable. Fortunately, retail wheeling can be a mutually advantageous set-up for both users and suppliers. Contrary to the assertions of certain quarters of the utilities industry, experience has shown that its effect is positive, as it leads to reduced user subsidies, encourages the institution of effective cost controls and enhances the planning capabilities of utilities.

See the full content of this document

Extract

---

Implications of increased competition in the electric industry for industrial customers.

Although NRECA opposes mandatory retail wheeling, it is important to understand all points of view on this issue. Dr. John Anderson is executive director of the Electricity Consumers Resource Council (ELCON), an association of industrial consumers of electricity. In this paper presented to the INFOCAST Competitive Power Sourcing for Industrial Companies Conference, Dr. Anderson asserts that retail wheeling is inevitable and is a critical component of the increased competition that is coming to the electric utility industry. He states several arguments against retail wheeling and why he believes they are without merit. INTRODUCTION

Thank you for the invitation to appear before you today to discuss "Implications of Increased Competition in the Electric Industry for Industrial Companies." ELCON is a consumer group--an association of industrial consumers of electricity. Our members have facilities in most of the 50 states and in many foreign countries. They produce a wide range of products including aluminum, steel, chemicals, petroleum, industrial gases, glass, motor vehicles, electronics, textiles and food. Although we have only 23 members, they represent nearly five percent of all electricity consumption in the United States. Our members need an adequate and reliable electricity supply. However, it must be competitively priced. We believe that the increased competition that is now coming to the electric utility industry will benefit all consumers. A critical component of this increased competition is retail wheeling. In my view, retail wheeling soon will be with us. It will assure the implementation of cost-effective conservation and energy efficiency measures, improve the planning function, and reward efficiency in supply. This will be good for all consumers, the economy, and the environment.

What I will do today is describe the factors that motivate large industrial electricity consumers to competitively source their electric supplies. This requires retail wheeling. I w...

See the full content of this document

---