ABSTRACT
Today, in the United States and much of the world, few utilities with this traditional structure exist. The industry is de-regulated, which among other things means that there is no longer a strict monopoly in electric power business and that many of the functions performed by that single vertical utility are fragmented and shared among a number of separate companies. However, the best way to understand the power industry and how it works is to look at this traditional, vertically integrated utility, as it existed until the mid 1990s. Here, a person found in one organization, in correct proportion and with all its gears meshing properly, the entire mechanism needed to produce, deliver, and sell power to home and industry, and to do so as a viable business. The discussion of the traditional, vertically-integrated utility is a sound starting point for this chapter’s subsequent look at de-regulation, since it was that utility and its industry that de-regulation sought to change. Therefore, this section will look at Big State Power and Light Company, a hypothetical vertically-integrated electric utility of the traditional type, serving a customer base of 1,000,000 connected meters (individual homes and businesses) in a service territory that contains a total population of about two million. Big State serves a large city and several nearby towns in a territory of about 10,000 square miles. In every respect, Big State Power and Light is a typical “large utility” as it existed prior to de-regulation.
