Electric Reliability: Options for Electric Transmission Infrastructure Improvements [Updated December 23, 2004] [open pdf - 287KB]
From the Summary: "The electric utility industry is inherently capital intensive. At the same time, the industry must operate under a changing and sometimes unpredictable regulatory system at both the federal and state level. The transmission system was developed to fit the regulatory framework established in the 1920 Federal Power Act: utilities served local customers in a monopoly service territory. The transmission system was not designed to handle large power transfers between utilities and regions. Enactment of the Energy Policy Act of 1992 created tension between the regulatory environment and existing transmission system: the competitive generation market encouraged wholesale, interstate power transfers across a system that was designed to protect local reliability, not bulk power transfers. The Energy Policy Act of 1992 introduced competition to wholesale electric transactions without a comprehensive plan to address reliability issues and the development of efficient wholesale markets. In addition, approximately half of the states have passed legislation or had regulatory orders to introduce retail competition, each with its own set of rules for utilities to follow. The blackout of 2003 in the Northeast, Midwest, and Canada has highlighted the need for infrastructure improvements and greater standardization of operating rules. Until the electric power industry reaches a new equilibrium with more regulatory certainty, many observers predict, investment in transmission infrastructure and technology will continue to be inadequate."
CRS Report for Congress, RL32075