HOW SHOULD GENERATING ASSET ACQUISITIONS BY REGULATED, VERTICALLY INTEGRATED UTILITIES BE OVERSEEN IN TODAY‟S QUASI-REGULATED ELECTRIC UTILITY ENVIRONMENT?

The utility environment is moving from its historical position as a regulated, monopolistic marketplace to a competitive, deregulated environment. Federal regulations over the past thirty years have recognized, and promoted, this move towards competition in the utility environment. In most areas of the country, however, the current market can best be described as quasi-competitive, resembling a competitive marketplace in some areas, while retaining monopolistic, regulated aspects in other areas. This move toward competition encouraged construction of a large number of merchant generating facilities in the late 1990‟s and early 2000‟s. Several of these facilities have entered a state of financial distress, and are being forced into divestiture. When the utility, operating in this quasi-competitive environment, is the purchaser of these facilities, several areas of concern related to the impacts on both the current and future competitiveness of the marketplace arise. The current methods of applying federal regulatory process to these purchases fail to effectively address these anti-competitive impacts. New practices must be implemented to deal with this new environment.