What is electric utility industry restructuring?
Electric industry restructuring changes the regulations under which we provide electricity to you so that competition can be introduced into both the wholesale and retail supply markets.

Why is the electricity industry restructuring?
The electric utility industry is among the last of the major regulated monopolies in the U.S.

Many factors drive the move to restructure the electric utility industry. These include:

• Deregulation in similar industries,
• Inconsistencies in the price and cost of electricity across the nation or within states or regions,
• Customers' desire for lower-cost electricity,
• Market entrance of independent power producers, aggregators and other new electricity providers.

Why is it restructuring now?
Regulated monopolies were intended to minimize duplicate facilities to ensure the least-cost reliable electricity service to all customers, including those who were difficult or costly to serve. With the facilities now in place and with improved technologies that have made it more efficient to provide service to these customers, some reasons for regulation no longer exist.

The Energy Policy Act of 1992 permits companies to sell energy at wholesale to each other across state lines on a competitive basis. To advance competition in the wholesale market, the Federal Energy Regulatory Commission (FERC) established "open access" operation of the electricity transmission system so that power producers can deliver electricity to their customers.

With wholesale competition paving the way, and with improved engineering and information technologies, retail customer choice now is feasible.

What will change?
The traditional structure
Under the traditional regulated system, a single company generates (produces), transmits and distributes electric power to its customers. Companies provide these services as one product at a single price. The utility is obliged to serve all customers located within its franchised service territory. In return, it has the opportunity to recover its costs, including a reasonable rate of return on its invested capital.

Customers cannot choose their energy supplier. They can purchase only the bundled product from the designated supplier at rates approved by the state regulatory commission.

A restructured industry
The common vision of a restructured industry unbundles supply, transmission and distribution functions. Electricity generation would be competitive business. Customers would choose their electricity service provider from current utility generators, power marketers, independent power producers, aggregators or other licensed competitors.

What will stay the same?
Transmission and distribution will continue as regulated, noncompetitive services. The Federal Energy Regulatory Commission(FERC) will oversee transmission activities while the states will regulate distribution. AEP, the company that delivers energy to your home or business today, will continue as your energy delivery company. It is possible, however, that companies will price their services in new ways. This would encourage efficiencies, facilitate necessary expansion or improvements and provide incentives for improved performance.

What choices will I be able to make?
Your major decision will be to select your energy service provider (ESP) -- the company that provides (either generates or obtains) the electricity you use.

Other competitive service providers may include:

• Your meter service provider (MSP) -- the company that installs, tests and maintains the device that measures your energy use;
• Your meter data management company (MDMA) -- the company that reads your meter and records information about your energy use and
• Your billing agent (BA) -- the company that gathers billing information from all your service providers and sends you an itemized bill and collects your payment.

What's in this for me?
Competition will benefit all customers by providing access to the marketplace. As you choose your energy provider, you will find your best pricing arrangement and select the services and products that best suit your needs. Moreover, competition likely will stimulate development of new products and services.

Will my electric bill be lower?
It's possible. Because choosing your supplier gives you added control over your electric bills, the amount you pay for electricity will depend in part on the choices you make.

Competition in other businesses generally has led to lower prices. But you will not know what, if any, savings you may receive until you compare the offers presented to you.

Will my electric service be as good as it is now?
Yes. Service quality and reliability should remain level. The FERC will continue to regulate transmission services, just as it does today. State regulatory agencies will oversee distribution wires services. Your local utility also will provide backup generation service.

Still, we strongly recommend that you carefully read the terms and conditions of service as spelled out in your contract with your new service provider.

What about safety?
Because your electricity will continue to be delivered by your current delivery company, you can expect the same level of safety you have known in the past.