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independent power producers. The National Energy Policy Act of 1992 (EPAct) continued 

 this trend both by creating a class of "exempt wholesale generators," power producers that 

 are exempt ftnni the provisions of the Public Utility Holding Company Act (PUHCA), and 

 by opening access to transmission for wholesale power transactions. While Bonneville also 

 has to provide access, it was granted the right to condition that access so that it does not 

 impede its ability to satisfy its other mandates, such as those contained in the Northwest 

 Power Act. 



While there are many difficult issues to be resolved in implementing the provisions of 

 EPAct, most observers conclude that EPAct will result in more power being produced by 

 independent develojjers, more pressure for access to transmission services by new producers, 

 more marketing of individual electrical services that are currently "bundled," less vertical 

 integration within the electric utility industry and, in general, more comptetition. 



Taken to the extreme, open transmission access could lead to "retail wheeling" ~ a 

 requirement that utilities distribute to their retail customers power produced by non-utility 

 suppliers or even other utilities. Under such conditions, customers may have their choice of 

 suppliers of electricity without having to move out of their current utility's service territory. 

 While EPAct did not require such transactions, it did underline the fact that the states have 

 responsibility for deciding this issue. Since the EPAct was signed, retail wheeling legislation 

 has been introduced in some states, although none have yet enacted it. 



Retail wheeling or even the expectation of it poses some significant problems. Some 

 utilities that believe retail wheeling is coming may be reluctant to make the investment in 

 long term, least-cost, but capital intensive resources like conservation and renewables. 

 While some of these resources are less costly in the long run, they may have a slightly 

 greater near-term impact on rates ~ one very narrow measure of comjjetitiveness. Utilities 

 also fear these resources will become "stranded investments," i.e., some of the customers the 

 resources were planned to serve may turn to other electricity suppliers, leaving the remaining 

 customers to pay for the resources. Customers who cannot take advantage of retail wheeling 

 or self generation will end up paying higher rates to cover the costs of such investments. 

 While it is tempting to believe that state regulators can "just say no" to retail wheeling, that 

 may not be possible. If there is a competitive advantage to be achieved through retail 

 wheeling, the pressures to allow it will become intense. 



Societal expectations. Society also has new expectations of the utility 

 industry. These include the expectation that utilities should be held accountable for 

 environmental damages resulting from power generation, transmission and related activities. 

 Such accounting may be retroactive, as in the Northwest's experience, where utilities are 

 now having to contribute to the recovery of salmon runs that were damaged, in part, by 

 hydroelectric dams built years ago. There is also a trend toward holding utilities accountable 

 for potential impacts of future resource development. These are legitimate societal aims. 



