Electricity Supply:

The Effects of Competitive Power Purchases Are Not Yet Certain

RCED-90-182: Published: Aug 23, 1990. Publicly Released: Nov 8, 1990.

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Pursuant to a congressional request, GAO reviewed: (1) electric utilities' use of competitive bidding to purchase electricity from nonutility generating sources; and (2) how such purchases might affect the reliability and cost of electric power.

GAO found that: (1) the effects of competitive power purchases on the long-term reliability of electric services are not yet certain and are difficult to assess; (2) determining the effects of competitive bidding on the cost of power requires comparing estimates of what the future costs and demand for electricity might be; (3) utilities may incur extra costs to replace lost generating sources, which could potentially affect the ultimate cost of purchased power; and (4) a lack of access to transmission facilities, eligibility criteria specified by utilities, and certain regulatory restrictions limit the potential for competition and affect cost.

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