The Changing Electric Industry

A national restructuring of the electric industry is on the horizon. How it affects Jackson Energy Authority and customers like you largely depends on what happens to the Tennessee Valley Authority, which currently provides us with low-cost electric power.

What is restructuring?
The goal of restructuring is to create more competition in the generation of electric power. This hopefully would lower prices for users. It’s possible that you – as a residential customer – would have the option to buy your power from a marketer, but it still would be delivered by your local distributor, which is JEA. In reality, those who most benefit from restructuring are large buyers of electricity – and not individual residential and commercial customers.

Will restructuring be good for JEA and it’s customers?
That depends largely on what happens to the Tennessee Valley Authority. First, it is important to understand that TVA’s mandate is to provide its customers low-cost electric services. TVA’s charter allows it to generate electricity and then transmit and sell it only to distributors in the Tennessee Valley area. Some people would like to see TVA no longer generate electricity nor build new power plants, or would like to see TVA dismantled or changed in other ways.

Why should TVA retain its ability to generate and sell electricity?
TVA does an efficient job of generating and transmitting electricity, and has given the Tennessee Valley area some of the lowest electric rates in the country. Though it was created by the federal government, it does not receive any federal funds for operating. We, TVA’s customers, pay for the cost of generating plants and transmission lines through our electric rates.

Will restructuring give us the same problems that California is having?
No. Hopefully, we have learned from what happened in California. That state – a step ahead of national restructuring – passed laws limiting who could generate electricity and capping what utilities could charge for electricity. At the same time, despite tremendous growth in California, no new power plants were built because of rigid environmental restrictions. The result was a greater demand than the supply of electricity. This raised the price. Utilities faced financial problems when they could not pass along the increased price to customers.

Will our rates go up?
It’s possible. Many parts of the country pay a lot more for electricity than we do. As rates even out, our rates could increase.

How will restructuring occur for us?
Congress is expected to pass a broad energy bill that will include TVA.

When will restructuring occur?
It probably will not happen in 2001, but most likely restructuring will occur in the next two to three years.

What is Jackson Energy Authority doing?
We know that what is best for our customers is best for JEA. We joined with other distributors in TVA’s region in reaching a consensus with TVA as to what we want to happen to TVA when restructuring occurs. We told our legislators that we want TVA to keep its mission of providing low-cost power in the Tennessee Valley and its ability to generate and sell electricity. If other companies can sell power in the Tennessee Valley, we want TVA to have the ability to sell its excess energy to other parts of the country. At the same time, distributors like the Jackson Energy Authority can buy cheaper electricity elsewhere if it is available.

Is there anything I can do about restructuring?
Yes. Support publicly-owned utilities like Jackson Energy Authority, which unlike investor-owned utilities, can have lower rates because we do not have to make money for investors when we set our rates. Support the Tennessee Valley Authority, whose mission to provide low-cost electric power in the Valley has given us some of the best rates in the country. Tennessee’s Congressional members recognize the importance of TVA’s mission. With your show of support, however, you can help strengthen their resolve to help us keep our electric rates as low as possible as electric restructuring is mandated for this country.