ECO 436 Industry Studies Electricity
History
7/12/2016
David G. Loomis 309-438-7979
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Early History
 1882 Thomas Edison’s first power plant
 Industry sought regulation from
“debilitating” competition
 1907 WI&NY regulate electricity
7/12/2016
David G. Loomis 309-438-7979
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Federal Power Commission
 1920 - Federal Power Commission
• regulate surplus power from federal irrigation
and water control projects
• 1935 - includes all wholesale sales of
electricity
• 1977 becomes FERC - 5 commissioners
7/12/2016
David G. Loomis 309-438-7979
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Public Utility Holding Company
Act (1935)
 Transformed multi-state, complex holding
companies
 Created simple corporate structures
 regulated by states
 confined acquisition of assets
7/12/2016
David G. Loomis 309-438-7979
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1950’s-1960’s
 First commercial nuclear plant (1957) in
Shippingport, PA
 Power Survey (1964)
• demand will grow from 200GW (1964) to 525
GW (1980)
• nuclear predicted to cost 0.5 cents/KWH
including capital, investment, fuel, op. Cost
• nuclear needs better coordination
7/12/2016
David G. Loomis 309-438-7979
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Great Northeast Blackout (1965)
 30 million without power from Canada to NJ
 leads to creation of NERC, North American
Electric Reliability Councils
• 10 regional councils - ASCC, ECAR, ERCOT, MAIN,
MAAC, MAPP, NPCC, SERC, SPP, WSCC
• MAIN - Mid-American Inter-connected Network
7/12/2016
David G. Loomis 309-438-7979
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David G. Loomis 309-438-7979
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David G. Loomis 309-438-7979
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1970’s
 Oil embargo - tripling of oil prices - rate
increases (1973)
 212 requests for rate increases totaling
$4.5 Billion
 113 nuclear plants scrapped
 67 coal-fired plants scrapped, (1972-1984)
7/12/2016
David G. Loomis 309-438-7979
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Otter Tail Power v. U.S. (1973)
 Forced IOU’s to “wheel” power to
municipally owned system
 suggested that industry arrangements for
transmitting electricity are within antitrust
law domain
7/12/2016
David G. Loomis 309-438-7979
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PURPA 1978
 Qualifying facilities - cogenerators that use
renewable energy sources
 Utilities must buy at avoided cost of new
capacity
7/12/2016
David G. Loomis 309-438-7979
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Energy Policy Act of 1992
 Created EWG, exempt wholesale generators
 EWG didn’t have to use particular fuels
 no requirement for utilities to buy from
EWGs
7/12/2016
David G. Loomis 309-438-7979
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FERC Order 888 & 889 (April 1996)
 Required utilities to open transmission
grids for access by all generators on a
nondiscriminatory basis
 Functional unbundling of rates for
generation, transmission and ancillary
services
 Guidelines for ISOs
7/12/2016
David G. Loomis 309-438-7979
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FERC 2000 (December 1999)
 Required utilities to join an RTO
(voluntary?)
 Guidelines for RTOs (Brennan/Palmer p. 79)
7/12/2016
David G. Loomis 309-438-7979
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FERC Standard Market Design (2002)
Same set of rules for all users of the grid
administered by a fair and independent entity
 Market rules that protect against market
manipulation
 Customer protection through market power
mitigation measures and oversight
 Clear transmission pricing and planning policies
for grid expansion

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David G. Loomis 309-438-7979
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