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The current transmission owners, the utilities, should not be compelled to sell their

assets. But without government-protected exclusive franchises, utilities may find it very

advantageous to spin off transmission assets to user-owned firms.33 Electricity consumers,

according to Houston, "clearly have sizable incentives to anticipate exchange problems

and devise contracts or ownership structures that efficiently address them. At the least,

that suggests that the existence of opportunistic market behavior is not a sufficient basis

for imposing close regulation; we need to consider what market institutions can be devised

to do much the same job."34 As Houston notes, "Unlike a regulatory [mandated open

access] solution to the access problem, the voluntary user-owned organization inhibits

monopolization by putting authority in the hands of those with a direct self-interest in

coordinating power transmission efficiently."35

Microturbines: Gas-Fired Monopoly Busters?

The conversion of the existing natural-gas system to an electricity transportation

system requires only the addition of gas-turbine generators by users. Modular, quiet,

small (less than one megawatt) microturbines may be the technology that turns the electric

power grid into the future equivalent of 19th-century canals.36 Power can be distributed

on low-voltage lines or consumed on-site. Capstone Turbine Corp. of California produces

165-pound microturbines smaller than an office desk that run at 55 percent efficiency

(compared to 35 percent efficiency for coal-fired plants) because high-pressure air

bearings eliminate the pumps and filters that lubricated systems need.37

Those new smaller scale generators will take advantage of a grid that already exists

"parallel" to the traditional electrical grid, the network of natural-gas lines. Under

competition, choice will emerge automatically even if no new transmission and distribution

lines are built: one can either burn source fuel (coal, gas, nuclear) far from the end user at

a central power station and then transmit the electricity through wires, or one can

transport natural gas through pipelines and use smaller turbines to convert that energy to

electricity at (or near) the point of consumption.

Existing utility transmission and distribution monopolies need no longer dominate

the market in such a scenario. Natural gas, not electricity, could be transported. Trigen

Energy Corporation chairman Tom Casten argues that the heat waste of today's central

station plants is too valuable to squander. Combined heat and power plants, such as the

cogeneration units developed by his company, can convert up to 90 percent of their fuel to

end-use energy, triple the efficiency of central plants.38 For that reason and others, Casten

believes that the current electric grid is living on borrowed time.

Central station generation . . . is finished as an economically viable

technology. In its place, widespread installation of smaller, more-efficient

generation, close to heat loads, will come to predominate and will collapse