CHARACTERISTICS

Some countries have deregulated their electricity sectors and opened their markets to competitive pressures. The introduction of competition is accompanied by independent power production, power wheeling, the removal of monopoly service territories and the separation of the generation, transmission and distribution sectors. Because of the highly competitive nature of the new electricity market, all participating companies have an incentive to manage, operate and maintain their systems as efficiently as possible.

Competitive pressures have been met in part by the development of advanced technologies that have lowered costs, reduced risks, improved performance and reduced emissions. Power marketers, that control the purchase and sale of electricity, rely on advanced software systems that respond instantly to market fluctuations. These changes result in a highly-efficient market.

To gain a competitive advantage and maintain customer loyalty, companies in a competitive market are offering services such as energy efficiency and "green power"–electricity generated from renewable energy or other low-emission sources.

SIZE:
Can affect one or more electricity sectors.

FEATURES:
Existence of power wheeling/third-party access to the grid.

COST:
Cost is not quantifiable. However, competition encourages efficiency improvements that increase output and decrease operating costs.

CURRENT USAGE:
These phenomena are seen in competitive markets around the world.

POTENTIAL USAGE:
Countries that do not yet have competitive power markets will gain from letting market forces drive efficiency increases.

ISSUES ASSOCIATED WITH IMPLEMENTING ACTION

• Where environmental standards are not high, or are not enforced, the lowest-cost power sources will be used the most; these may also be the most-polluting sources.

CLIMATE CHANGE IMPACT

EMISSION EFFECT:
    

REDUCED CONDITIONS FOR EMISSIONS MITIGATION:

• With greater efficiency, more energy is produced/kWh meaning that emissions/kWh are reduced.
• However, where environmental standards are not enforced or are not stringent, less-expensive but more highly-polluting technologies may be used; this may actually increase total emissions.

EMISSION ESTIMATE:
Varies.

COST-EFFECTIVENESS:
N/A

SECONDARY EFFECTS:
Varies.

RESOURCES

• CRIEPI, 1996, Impact of Competition in the Power Market on the Environment and Energy Conservation, Annual Research Report. http://criepi.denken.or.jp/ National Council on Competition in the Electric Industry, 1996, Electric Industry Restructuring Series (6 Volumes), (October 1996. This series of reports explores the frontier of restructuring the electric industry. (Available from NARUC).
• NARUC, 1995, Promoting Environmental Quality in a Restructured Electric Industry, (December).

CONTACTS

National Association of Regulatory Utility Commissioners
Washington, D.C.
Tel: (202) 898-2200
Fax: (202) 898-2213
http://www.naruc.org