In the traditional market structure of the electricity industry, generation, transmission and distribution of electricity are owned and managed by vertically-integrated monopolies. This form of market structure, which still prevails in much of Canada today, was widely adopted because the electricity supply industry was regarded as a natural monopoly. With respect to generation, this meant that lowest costs could be achieved by building large scale power plants. The nature of long-distance transmission systems and local distribution systems also fit the natural monopoly model. Even if competition were possible in generation, it would still not be economically feasible to build competing transmission and distribution facilities to serve the same market, i.e., lowest costs would be achieved by one facility.
展开▼
