Electric utility deregulation

In recent years, major industries in the United States have been deregulated - for example, telecommunications, airlines, and banking - and now the winds of change are blowing through the electric utility industry. Federal legislation has opened up the nation's transmission grid and has helped create a thriving independent power generation sector. Large companies and municipalities are finding ways to bypass traditional utilities and find cheaper power sources. But the experts do not agree on how much change is good for the country and how fast it should occur. Some utilities maintain that aggressive deregulation would force them to write off investments they had made to satisfy regulators in the past - and leave them with stranded costs. Other constituencies debate fair compensation of grid owners for transmitting the electricity. Still others are concerned about ensuring that residential and small-business customers share in any gains from an open market. Thomas R. Kuhn of the Edison Electric Institute, Pradeep (''Pete'') Mehra of the Ford Motor Company, Robert L. Ball of Alcan Aluminum Corporation, Richard C. Green, Jr, of UtiliCorp United, Donald E. Felsinger of San Diego Gas & Electric Company, David L. O'Connor of the Massachusetts Division of Energy Resources, Michael Shames of the Utility Consumers' Action Network, and John R. Hodowal of IPALCO Enterprises express their differing viewpoints in HBR's Perspectives, covering such topics as stranded costs, aggregation of small consumers, vertical deintegration, performance-based rate making, and retail wheeling of power.