Setting the Stage

Abstract

The United States has embarked on the most massive, complicated industrial reorganization since the end of World War II: the deregulation of the electric utility industry (see Table 1). The Eastern Interconnection alone, one part of the North American power grid, has been described as the most complex machine ever devised by man¹, and it is nine times bigger than the largest power system deregulated to date, that of the United Kingdom (see Table 2). The organization of the industry in North America further complicates the process. The North American power grid operates under the jurisdiction of three countries and more than 55 state or provincial governments. Hundreds of firms, investor- and government-owned, of different sizes and cost structures, supply electricity. (The United Kingdom’s industry, on the other hand, had one owner, one large fuel supplier, one control area, one regulator, and one government.) The politics of the process could prove as difficult as the technical issues.