Figure 1. Status of State Electric Utility Deregulation Activity, as of January 2001

The year 2000 was clearly a transition year for the electric industry as the Nation moved State by State toward restructuring. Consolidation through mergers and acquisitions was prominent as industry participants maneuvered, hoping to gain a competitive advantage. Divestiture of generating assets was common as some electric utilities exited the generation business in order to concentrate on the distribution of electricity. Others used the opportunity to purchase divested assets to build critical mass that many think will be necessary to survive what is expected to be a very competitive industry.

The transition from a highly regulated business into a competitive market did encounter a stumbling block in 2000, one that could slow its course and cause some to reconsider the idea of restructuring—California. In April 1998, California became the first State to restructure its electric industry. Yet, in 2000 there was very little good news concerning restructuring to come out of the State. Rolling blackouts, sky-high electricity prices, and utilities nearing bankruptcy were all linked to the restructuring of California's electric industry. By year-end, re-regulation was a hot topic. In the near term, the attention that was focused on the pitfalls of restructuring in California affected restructuring sentiment in other States. During the year, only two additional States enacted restructuring legislation—Michigan and West Virginia—bringing the year-end total to 23 States and the District of Columbia. In the longer term, California may end up being just a ‘lesson learned' for the remainder of the States contemplating changes to their electric industry.

Though restructuring had profound affects in California and other States during 2000, the focus of this report is on basic industry data such as generating capability, generation, fuel consumption, cost of fuels, and retail sales and revenue; to provide a review of various influences on the operations of the electric industry during the year, and to explain significant changes from prior years in State, Census Division, and National level.data collected from the industry in 2000. Topics include record nuclear generation, a substantial decline in hydroelectric generation, record high natural gas prices, weather induced changes to industry operations, and the start of Phase II of the Clean Air Act Amendments of 1990. Also, the affect that reclassification of generating plants from the utility sector to the nonutility sector had on the data presented in this publication is discussed.

Endnote

¹ United States Department of Energy, Energy Information Administration. Extracted from the Internet at http://www.eia.doe.gov/cneaf/electricity/page/restructure.html, on May 29, 2001.