Experience gained from electric power liberalization

Abstract:  Abstract The momentum of electric power liberalization (i.e., deregulation) changes from region to region with some regions being more successful than the others. Japan is just starting to liberalize the electric power system. The customers in the UK saved #700 million in one year under electric power liberalization. Other countries such as Australia, Sweden, Norway, and Finland have benefitted from liberalization of electric power. In the United States, Federal Energy Regulatory Commission issued Orders Numbers 888 and 889 that started the electric power liberalization in 1996. The Orders mandated electric utilities to open the transmission system on an equal basis to all who utilize it (OASIS). The suppliers can sell electricity directly to the consumers using electric utility transmission lines. The service of maintaining real time balance between generation and load is performed by load following that is one of the six specified Ancillary Services under FERC Order No 888. Without Load Following Service, another service, in particular Regulation, does this function. Regulation is one of the other Ancillary Services that the transmission providers must provide. During the past decade, the demand for electricity in the USA has increased by 35 percent, whereas, the generation has increased only 18 percent. With electric power liberalization and shortage of transmission lines, open transmission access has resulted in increased electric power transfers that operate closer to the stability limits. Electric power liberalization has been implemented in other parts of the world mostly with success. The World Bank and the International Monetary Fund ask countries receiving their loans to liberalize their state owned power companies as a condition of financial aid. Industry experts from all regions of the world concluded that the problem is isolated primarily to California.