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Generation, or the manufacture of electricity, has been deregulated and is the only portion of the industry to be deregulated at this time. Transmission, or the moving of electricity from where it is made to where it is distributed, has been re-regulated. Distribution of electricity to the customer remains regulated (unchanged).
Unfortunately, the electricity industry only has one of the three elements that make for effective competition. In many parts of the country, including California and New York, there is not enough generation capacity to meet existing electrical demands. In addition, in many parts of the country there are limited transmission lines to carry energy to other places. This means that even when the energy is available it cannot be delivered to various parts of the country. For example, there are only two transmission lines connecting Long Island to the rest of New York State. These lines have a capacity of approximately 1,200 megawatts. Long Island had a 4,800 megawatt peak load in 1999. Due to limited transmission capacity, Long Island has to use generation located on Long Island.
Considering the generation and transmission problems in most parts of the country, it is apparent that deregulation will only result in increased prices for many years to come.