A Shock to the System is a guide to the decisions that will be faced by electricity providers, customers, and policymakers. Produced by a team of analysts at Resources for the Future, this concise and balanced work provides background necessary to understand the increasing role of competition in electricity markets. The authors introduce important concepts and terminology, and offer the history of public policy regarding electricity. They identify the significant proposals for implementing competition, and examine the potential consequences for regulation, industry structure, cost recovery, and the environment.

1. Introduction: Why Care about Restructuring the Electricity Industry?The Coming of Competition to the Electricity IndustryPolicy Initiatives Shaping Regulatory ReformThe Six Major IssuesThe Goal2. The Electricity Industry and Its Regulatory HistoryFunctions of the Electricity IndustryComposition of the Electricity IndustryA Century of Electricity PolicyConclusion3. Implementing Competition: Different Levels, Different ModelsForces for CompetitionThe Scope of CompetitionTwo Proposed Market Structures4. Market Power in Delivering Power: Regulating Electricity TransmissionPremises for Regulating TransmissionWhether to Regulate TransmissionHow to Regulate TransmissionSpecial Features of the Transmission IndustryConclusion5.Restructuring Electric Utilities: The Pros and Cons of Vertical IntegrationPros and Cons of Vertical IntegrationVertical Integration Where Markets Are Not CompetitiveVertical Integration under RegulationKey Restructuring QuestionsConclusion6. Paying for the Past before Entering the Future: Coping with Stranded CostsStranded Costs throughout the EconomyEconomic Principles of Regulation: How Big Could the Stranded Costs Be?Economics of Contracts: What Was the Regulatory Compact wiht Electric Utilities?Recovering the Costs: Practical Proposals for Handling Stranded CostsConclusion7. Implications of Restructuring for Environmental ProtectionDealing with Air PollutionHow Restructuring could Affect the EnvironmentRestructuring and Environmental PoliciesNew Policies to Address the Environmental Consequences of RestructuringConclusionEpilogueMerger PolicyEntry into Telecommunications MarketsElectricity Research and DevelopmentSocial ProgramsUtility Tax Policy