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The yawning gap between the popular perception and the reality of grid electricity has huge consequences. After all, the state regulators, are ever sensitive to popular perception, control how much utilities invest in the grid. And the state regulators must be persuaded that the grid is worthy of the billions and billions of investment dollars that will ready it to meet the unprecedented reliability requirements of the mid-21st century. The Department of Labor's Bureau of Labor Statistics surveys tens of thousands of American households annually about their expenditures in extraordinary detail. Electric bills were just 2.1% of households' total expenditures in the West and 2.3% in the Northeast. Regular opponents of utility rate increases vigorously criticize most proposed increases and argue their negative impact on consumers. In 2012, 73% of the lowest income quintile households paid less than the average electric bill (the average of all households or $3.79 per day).

Merchant plant development is primarily driven by the battle for market share. Efficient new combined-cycle plants are beginning to take market share from the clunkers - highly inefficient units that are long past their prime. Even before their owners relent and take the final step of retirement, the clunkers run less and less. No point sacrificing quarterly earnings on a unit that, despite its many years of loyal service and a good fuel contract to boot, is a loser on a multi-hour block basis. The efficient new plants profit whether the reserve margin calculation comes out to 10% or 20%, and whether annual demand growth is 1% or 2%. Other factors work against the credibility of the glut forecast. The broad pullback in plant development plans since the September 11 attack is one factor. The upshot is merchant plant development ramps up and down fairly well now in accordance with the market.

The Federal Energy Regulatory Commission (FERC) issued on March 29, 1995, its massive Giga-NOPR for electric utility competition. The FERC proposes that utilities make their wholesale transmission facilities as convenient for outside parties to use as they are for the utilities themselves. A noteworthy proposal in the Giga-NOPR attempts to define what lies within the FERC's jurisdiction and what falls to the state public utility commissions. In addition there is the little-noticed Request for Comments on Real-time Information Networks, or RINs. This 19-page FERC proposal pales in comparison to the lengthy NOPRs on transmission access and stranded costs. The RINs document presents a rather technical discussion of what transmission data must soon be reported, how frequently, and in what computer format. However, just because the RINs idea seems technical and less exciting does not mean it will not prove to be one of the FERC's most important proposals.

When the Clean Air Act Amendments were enacted, many observers expected the new law to usher in a futuristic system of environmental control cum economic incentives. This has yet to materialize. However, the legislation has brought in an entirely different new environmental order-rigid emissions accounting, down to each operating hour. In many respects, EPA regulation of fossil plant operations is coming more to resemble the Nuclear Regulatory Commission regulatory model for nuclear plant operations, where regulation of process and procedure is at least as important as substance. The final continuous emission monitoring (CEM) rules, which were enacted as part of the Acid Rain Program, are perhaps the best evidence of this evolution. There can be no denying that the CEM rules are a prosecutor's dream. Not only must the industry comply with the law, but it must go to heroic efforts to make affirmative proof of compliance. The final CEM rules are a serious matter requiring the immediate attention of the electric utility industry.

For all the attention focused on new laws and regulations designed to create competition in electric power markets, too few people seem to grasp how a market can work. That will change, however, now that Pennsylvania is the first large state to embrace market pricing. Pennsylvania's lawmakers and three of its five utility commissioners have developed a market to deliver the benefits of competition to consumers. Rather than guarantee politically attractive rate reductions, the Pennsylvania Public Utility Commission, led by Commissioner John Hanger, has challenged market focus to deliver more savings than contemplated in any supposed guarantee. The PUC's decision in the PECO Energy restructuring case provides a guidepost for utility commissions around the nation for dealing with electric restructuring.

In recent years, at least 35 utilities formed unregulated subsidiaries that can be classified as solutions businesses. The motivation for these businesses was straightforward. With the onset of deregulation, utilities found it desirable to establish new streams of earnings and earnings growth. Utilities would leverage their relationships with commercial and industrial customers. But selling energy to commercial and industrial customers, a practice attempted by most solutions businesses, has proven unprofitable. The solutions business is no longer part of the solution.

Many US electric utility managers unknowingly may have discounted the critical significance of one element of the EPA's Acid Rain Title. Section 412 requires installation and operation of continuous emission monitoring (CEM) systems that will produce quality-assured measurements of sulfur dioxide and nitrous oxide emissions, as well as opacity and flue gas flow. Whether or not an affected utility or non-utility generator chooses to participate in the emissions allowance trading market, it must confront the CEM rules. Section 412 specifically mandates compliance with monitoring requirements by November 15, 1993, for Phase I units and by January 1, 1995, for Phase II units. The immediacy of these deadlines will test the logistical skill of utilities and the capability of monitor vendors to install precision instruments in quantity within a constricted time period. The EPA reasons that anything less than a demanding CEM program will erode public acceptance of the emissions allowance trading program.

USA Today headline last December boldly announced, \"Electric bills soar $300 in 5 years.\" The article led off with this statement, \"Electric bills have skyrocketed in the past five years.\" A distressing statement indeed -- though immediately followed by the tempering point that this was \"a sharp reversal from a quarter-century when Americans enjoyed stable power bills even as they used more electricity.\" Readers who followed the article all the way through saw a second mitigating admission: \"A potential bright spot: Electric bills appear roughly the same so far this year as last 2011 versus 2010 when adjusted for inflation, based on preliminary reports.\" So, it would be surprising for customers to hear that, for a majority of American households, electricity costs are moderate. It might border on disbelief to hear that electricity costs for households and businesses have been remarkably stable over several decades. Even as air conditioning went from a rarity to near-saturation.