The old school of thought that considered electric utility power generation, transmission, and distribution a "natural monopoly" has given way to a new school of thought. Today, there is a general consensus among legislators, regulators, industry analysts, and economists that the generation segment of power supply in today's environment would be more efficient and economical in a competitive market. In contrast, transmission and distribution will likely remain regulated and noncompetitive.
The electricity industry is being restructured. It is currently in the midst of a transition from a vertically integrated and regulated monopoly to an entity in a competitive market where retail customers choose the suppliers of their electricity. The change began in 1978, when the Public Utility Regulatory Policies Act (PURPA) made it possible for nonutility generators to enter the wholesale power market.
The figure above shows not only the share of generation by each component of electricity supply but also the significant amount of change that has occurred in the nonutility segment of the industry in the last 10 years. (Refer to the next page for terms and definitions which will characterize each utility and nonutility component.)
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