10 Thermalpower plant simulation and control

1.4.1 Power system deregulation

During the years between the end of World War II and the 1970s, utility management
in the United States and Europe focused on the major task of building new power
plant and improving the transmission and distribution grids to meet the demands of
rapidly growing economies. The only competition that existed was between indi-
vidual concerns trying to install the largest generating unit of the day or the most
thermally efficient unit. Beyond this, utility managers remained cooperative with
their colleagues. The business and technological strategies they employed were all
very similar and governed mainly at national level. The level of cooperation extended
to national research and development organisations, for example, the Central Elec-
tricity Generating Board (CEGB) in the United Kingdom and the Electric Power
Research Institute (EPRI) in the United States. These organisations engaged in col-
laborative research and openly shared their findings, as few secrets existed among
their members.
The United States was the first to truly witness the 'winds of change' for the
regulated utilities. Growing discontent from the general public was fuelled by the
continued price increases in electricity, the spiralling costs of large generation plant
and widespread fears about nuclear generation. In an attempt to placate the public
the United States introduced the Public Utilities Regulatory Policies Act in 1978 to
allow unregulated generators to supply the grid. By doing so it was hoped that non-
conventional and independent sources of power would appear. These independent
power producers (IPPs) were not allowed to sell to end users but it was mandatory
for local regulated utilities to purchase their generated output. This measure proved
sufficiently successful that by 1993 some 50 per cent of new generating capacity in
the United States was being constructed by IPPs.
These changes challenged the long-held belief that electrical generation and dis-
tribution was a natural monopoly. With this realisation the next step was to open up
the market whereby customers could, in theory, benefit from increased competition.
In the United Kingdom, the Electricity Act of 1989 legislated for the breaking up
of the nationalised CEGB industry into smaller privately owned companies. A 'pool'
system was introduced, where generators competed against each other for contracts
to generate electricity (Hunt and Shuttleworth, 1997). The new legislation separated
the product (generated electricity) from the transportation medium (the transmission
grid). In doing so, costs could be unbundled into an 'energy' and a 'delivery' com-
ponent. These arrangements were replaced in March 2001 by the New Electricity
Trading Arrangements (NETA) in an attempt to facilitate greater market freedom for
generators and suppliers, particularly in the wholesale market. Plans exist to extend
these arrangement to Scotland by creating the British-wide Electricity Trading and
Transmission Arrangements (BETTA).
The United States has gradually been moving towards increased competition.
Here, privatisation is not considered an issue, as the majority of electricity companies
are investor-owned utilities that are territory based. In 1992 the Energy Policy Act
permitted wholesale customers the choice of supplier, and obligated the relevant
utilities to transmit power across their networks. Their restructuring model resembles
that which was implemented in the United Kingdom.