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Competition in the Electric Industry: Emerging Issues, Opportunities, and Risks for Facility Operators - Conference Summary
Competition in the Electric Industry: Emerging Issues, Opportunities, and Risks for Facility Operators
Conference Summary
Federal Facilities Council Standing Committee on Operations and Maintenance
Report Number 132
NATIONAL ACADEMY PRESS
Washington, D.C.
1996
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Competition in the Electric Industry: Emerging Issues, Opportunities, and Risks for Facility Operators - Conference Summary
NOTICE
The Federal Facilities Council (FFC) (formerly the Federal Construction Council) is a continuing activity of the Board on Infrastructure and the Constructed Environment (BICE) of the National Research Council (NRC). The purpose of the FFC is to promote continuing cooperation among the sponsoring federal agencies and between the agencies and other elements of the building community in order to advance building science and technology–particularly with regard to the design, construction, and operation of federal facilities. Currently, the following agencies sponsor the FFC:
Department of the Air Force, Office of the Civil Engineer
Department of the Air Force, Air National Guard
Department of the Army, Corps of Engineers
Department of Energy, Office of Associate Deputy Secretary of Field Management
Department of the Navy, Naval Facilities Engineering Command
Department of State, Office of Foreign Buildings Operations
Department of Veterans Affairs, Office of Facilities Management Food and Drug Administration
General Services Administration, Public Buildings Service Indian Health Service
National Aeronautics and Space Administration, Facilities Engineering Division
National Institutes of Health
National Institute of Standards and Technology, Building and Fire Research Laboratory
National Endowment for the Arts, Design Arts Program
National Science Foundation
Smithsonian Institution, Office of Facilities Services
U.S. Information Agency, International Broadcasting Bureau
U.S. Public Health Service, Office of Management
U.S. Postal Service, Facilities Department
As part of its activities, the FFC periodically publishes reports like this one that have been prepared by committees of government employees. Since these committees are not appointed by the NRC, they do not make recommendations, and their reports are considered FFC publications rather than NRC publications. For further information on the FFC program or FFC reports, please write to: Director, Federal Facilities Council, Board on Infrastructure and the Constructed Environment, 2101 Constitution Avenue, N.W., Washington, D.C. 20418.
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Competition in the Electric Industry: Emerging Issues, Opportunities, and Risks for Facility Operators - Conference Summary
FEDERAL FACILITIES COUNCIL STANDING COMMITTEE ON OPERATIONS AND MAINTENANCE
Chairman
James Walton,
U.S. Army Corps of Engineers, Department of the Army
Vice Chairman
Richard McCrone,
Operations and Energy Management Division, Department of Veterans Affairs
Members
Subrata Banerjee,
Bureau of Health Resources Development, U.S. Public Health Service
Walter Borys,
Network Engineering, International Broadcasting Bureau
Hao Bui,
Facilities Engineering Branch, International Broadcasting Bureau
Jodi Ernst,
Office of Facilities Services, Smithsonian Institution
Paul Fardig,
Engineering Support Services Branch, U.S. Public Health Service
Gary Fennell,
Facilities Division, Air National Guard
Paul Fennewald,
Maintenance Branch, U.S. Postal Service
Geoffrey Frohnsdorff,
Building Materials Division, National Institute of Standards and Technology
William Graham,
Engineering Management and Field Support Office, Department of Veterans Affairs
Benjamin Herrick,
Network Support Division, International Broadcasting Bureau
John Iaconis,
Public Buildings Service, General Services Administration
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Competition in the Electric Industry: Emerging Issues, Opportunities, and Risks for Facility Operators - Conference Summary
William Johnson,
Facilities Engineering Branch, Indian Health Service
Gregory Krisanda,
Office of Foreign Buildings Operations, U.S. Department of State
Peter Lastik,
Facilities Division, Air National Guard
Patrick Miller,
Office of Plant Services, Smithsonian Institution
William Morrison,
Facilities Division, Air National Guard
Charles Pittinger, Jr.,
Facilities Engineering Division, National Aeronautics and Space Administration
Douglas Rowand,
Facilities Division, Air National Guard
Steve Salter,
Naval Facilities Engineering Command, Department of the Navy
John Scalzi,
Structures and Building Systems, National Science Foundation
J. Ronald Smith,
Division of Facilities Management, Food and Drug Administration, U.S. Public Health Service
Gregory Tsukalas,
Facilities Branch, U.S. Army Corps of Engineers
Nongovernment Liaison Members
Dianne Davis,
American Public Works Association
Robert Hummer,
Association for Facilities Engineering
Staff
Lynda Stanley, Director,
Federal Facilities Council
Lena Grayson,
Project Assistant
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Competition in the Electric Industry: Emerging Issues, Opportunities, and Risks for Facility Operators - Conference Summary
PREFACE
COMPETITION IN THE ELECTRIC INDUSTRY: EMERGING ISSUES, OPPORTUNITIES AND RISKS FOR FACILIITY OPERATORS
Significant and rapid changes are taking place in the electric industry as a result of efforts to introduce competition. The industry is in a period of transition as it moves toward open access transmission and as services such as power generation, transmission, and distribution are "unbundled" and opened to competition. These changes will ultimately effect those who generate, market, and purchase electricity.
Reductions in electric power costs is one potential outcome of the effort to introduce competition in the industry. Such reductions would be supportive of the National Construction Goals of the National Science and Technology Council which seek to achieve a 50% reduction in operation, maintenance, and energy costs of facilities by 2003. However, competition for electricity raises a number of significant issues. These include how to establish a clear line of jurisdiction on electric power issues between the Federal Energy Regulatory Commission and the 50 states and the District of Columbia; how to retain the reliability of the system; how utility companies will be reimbursed for past investments in generating facilities, made in good faith, that will become uneconomic in a competitive market (so-called stranded costs or stranded investments); impacts on special purpose programs, such as research and development, demand-side management, energy efficiency programs, and rate assistance to low income households; and potential impacts on consumers.
To address these and other issues the Federal Facilities Council convened a conference on "Competition in the Electric Industry: Emerging Issues, Opportunities, and Risks for Federal Facility Operators" in May
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Competition in the Electric Industry: Emerging Issues, Opportunities, and Risks for Facility Operators - Conference Summary
1996. The conference brought together experts in regulatory policy, energy markets, utility operations, and government procurement, from industry, government, nonprofit research organizations, and academic institutions. The objective was to provide a nontechnical overview of the significant issues and potential impacts of competition in the electric industry on consumers in general and federal facility operators in particular. Speakers focused on:
The background, current status, and future prospects for competition in the electric industry
Jurisdictional issues and relationships between federal and state regulators
Issues of electric power ownership, distribution, services, and pricing
Restructuring of the electric industry and the emergence of new entities in that industry
Federal agencies' perspectives on potential opportunities, risks, procurement, and management considerations for federal facility operators.
This report includes papers based on many of the presentations made at the conference. In a few instances, the papers refer to actions taken between the time of the conference (May 1, 1996) and the printing of this report (November 1996), to provide up-to-date information for the reader.
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Competition in the Electric Industry: Emerging Issues, Opportunities, and Risks for Facility Operators - Conference Summary
CONTENTS
Executive Summary
1
The Federal Energy Regulatory Commission's Open Access Rule
6
Electric Power Competition: Perspective of a Regulator
13
A Road Map to Electric Restructuring in California: Decisions 95-12-063 and 96-03-022
26
The Restructuring of California's Electric Industry: A Utility's Perspective
35
Competition in the Electric Power Industry: A View from New York
44
Buying and Selling Electricity: Perspective of a Power Marketer
53
Perspective of an Electrical Power Customer
58
Opportunities and Risks in Electric Competition: A View from the Department of Defense
62
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Competition in the Electric Industry: Emerging Issues, Opportunities, and Risks for Facility Operators - Conference Summary
Saving Billions from Energy Efficiency in the Federal Sector: Institutionalizing Energy Efficiency in Facility Management
66
Acquisition of Utilities Services: Some Legal Considerations
72
Additional Considerations in the Electric Competition Debate
76
Speaker Biographies
84
Glossary
87
