To wheel or deal?: Electric industrial pricing in California

Retail wheeling by commission fiat is nothing more than a regulatory sanction of bypass: a means to make nonutility power available to lage industrial (direct access) customers. The initial California timetable, which was delayed again and again, would have made retail wheeling available to these customers by January 1, 1996. The presumption was that large customers could buy nonutility power at cheaper rates than the utility company could offer. But bypass under this mindset will only exaggerate - not mitigate - the enormously expensive issue of stranded costs. By any standard, a ruch to mandatory retail wheeling signifies an extreme measure, an overreaction to a condition for which there is an easier and better remedy. Mandated retail wheeling as proposed in California stemmed from a perception that electricity prices, particularly for large industrial customers, were too high - that bypass would cut prices to competitive levels. The economies of scale, the lowre costs associated with bulk deliveries, and the economics of unutilized spare capacity have, more frequently than not, been downplayed.