regulation would be implemented, but from the beginning, both groups recogni/ed that it was necessary. From the perspectie of the businessmen running the early utilities, regulation brought seeral important benefits.a.(t legitimi/ed the electric utility business. oernment franchises and regulation clearly implied to a possibly s!eptical public that ciic leaders thought electricity was a “good thing”. b.(t gae utilities recognition and limited support from the local goernment, in approing *ight+of+way and easements, and by generally cooperating with them as they e)panded their embryonic companies.c.(t assured a return on inestment, regulated as that might be.d.(t established a local monopoly. $arly utility leaders could focus on building up their systems and the uality of them, without haing to worry about competitors undercutting prices to gain mar!et share, etc.-eyond the reason discussed aboe, and perhaps most important for both goernment and business, regulation offered an acceptable, ris!+free way to finance the creation of an electricity supply industry. &t the dawn of the electric era, goernment leaders were not about to inest large amounts of public capital in a new and untried technology, no matter how attractie it appeared. *egulation too! care of that+the businessmen would ris! their money, not the goernments. "rue, the goernment was guaranteeing them a fair return on their inestment, but only through regulated rates. (f electric technology didnt wor!, or if this new energy source didnt sell in the mar!etplace, then the businessmen lost money, not the public.
1.1.# $!rcteri%tic% o" Regulted Electric Utilit& Structure
*egulated electric utilities proided the industry with stable growth and good serice for more than a century. "he !ey characteristics of the *egulated $lectricity (ndustry are as follows3a.
3 nly the local electric utility can produce, moe or sell commercial electric power within its serice territory. b.
O(ligtion to Ser)e
3 "he utility must proide serice to all electric consumers in its serice territory, not ust those that would be profitable.c.
3 "he utilitys business and operating practices must conform to guidelines and rules set down by goernment regulators.d.
3 "he utility must operate in a manner that minimi/es its oerall reenue reuirements 4amount it must bill its customer base5.e.
3 "he utilitys rates 4prices5 are set in accordance with goernment regulatory rules and guidelines.
Wit!out utilit& regultion nd go)ern+ent %'on%or%!i' or (c,ing o" electric utilitie%- uni)er%l electric %&%te+ rec!ing ll !o+e% nd (u%ine%%e%- nd t!e in"r%tructure to %u''ort it- ould ne)er !)e (een (uilt.