Customer Choice Federal Activity
Much electric industry restructuring will take place at the state level, although some activity will occur at the federal level.

Some current federal regulations have significant impact, both positive and negative, on market competition of utility services.

PURPA
Current efforts to restructure the electric utility industry and introduce competition began with passage of the Public Utilities Regulatory Policy Act of 1978 (PURPA). This law requires utilities to buy power from independent power producers. Its purpose was to encourage development of smaller generating facilities and to increase use of new technologies and alternate fuel sources. On the down side, PURPA has tied many utilities to high-priced, long-term energy contracts.

EPAct
The Energy Policy Act of 1992 (EPAct) permits more types of unregulated companies to produce and sell electricity. EPAct created a competitive wholesale market for electric power. This means that electric utilities and other companies can sell energy to each other across state lines on a competitive basis. EPAct also specifies the Federal Energy Regulatory Commission's (FERC) jurisdiction over the wholesale electricity marketplace. It also specifies that retail electricity competition remains within state regulatory commission overview.

PUHCA
The Public Utilities Holding Company Act (PUHCA) restricts some activities of multistate holding companies such as AEP. Passed in 1935, it requires that these companies obtain express permission from the Securities and Exchange Commission (SEC) to engage in certain business activities. Because the PUHCA does not apply to all electric utility companies, it places some companies at a competitive disadvantage.

Regional Transmission Organization (RTO)
The FERC established "open access" operation of the electricity transmission system through Order 888. Order 888 makes competition possible because it requires utilities to provide nondiscriminatory "open access" to transmission facilities, providing the means by which power producers can deliver electricity to their customers. A Regional Transmission Organization (RTO) would provide fair and open access to all competitors, reliable transmission of power to customers and would simplify transmission pricing. The RTO could take one of two or more forms. To date the most likely RTO structures include:

Transco - a separate for profit transmission company where facilities ownership is transferred to the new entity or

Independent System Operator (ISO) - companies maintain ownership of transmission but they are operated and managed by an independent not-for-profit organization.

In December 1999, the FERC issued Order 2000, which requires companies to file their RTO plans by October 15, 2000, or by January 15, 2001, for participants in approved RTOs. Order 2000 expects RTOs to be operational by December 15, 2001.