The deregulation of electric utilities in California and its effect on Navy Installations

Abstract

On January 1, 1998, California will be the first state to deregulate its electricity industry. Deregulation is expected to reduce the high rates paid throughout the state by allowing competition, not regulators, to determine rates. Deregulation will dissolve the monopoly of the electricity industry by allowing customers to choose who will supply their electricity. Competition will emerge in the generation market, where transactions between consumers and suppliers will be free and open. Under regulation, most customers do not have a choice in their electricity supplier. Their supplier is usually determined by their geographic location. This thesis researches the differences between the regulated and deregulated rate structures and provides a cost comparison for a Navy organization classified as a large commercial/industrial user of electricity. There are many aspects of deregulation that are not yet determined, but the initial comparison indicates deregulation may save Navy installations money. If deregulation progresses as planned, additional future saving may occur