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Session 1333

Educating Engineers To Make Technological Contributions In the New Competitive Electrical Power Market

Fred Haag New York State Department of Public Service

The free-market economic system is generally recognized as a powerful means to improve human conditions. This system, which is based on having fair competition, provides the incentives to produce more goods and services for consumers. In addition, the need for a stable and transparent legal framework to support fair competition has the added benefit of aiding the development of democratic institutions.

An understanding of the free market system requires an understanding of some basic economic principles. There is, however, a disconnect between economics as it is taught to engineers, commonly called "engineering economics," and the principles from mainstream economics that are relevant to the mechanisms that make free markets work. This paper illustrates the modifications that are needed by using electric energy conversion and conservation as an example.

After a century of regulation as a monopoly, the nation’s electric power supply systems are undergoing quantum-leap changes. The generation and other contestable functions are being transformed, as were the airlines and long-distant communications before, to enter the modern era of competitive-driven market-oriented enterprises. The potential benefits are enormous: lower electric bills, greater choice of supplier, and the promise of innovation. This paper discusses where engineering education should refocus in order to prepare energy conversion and conservation engineers for the opportunities that will be created by the new paradigm.

Selected aspects of the current treatment of engineering economics will require different emphasis to prepare engineers for work in the field of energy conversion and conservation. For example, a market-focused engineer should become familiar with some basic supply and demand concepts from micro economics, have an appreciation for the issues associated with market power, and possess a customer-oriented focus. In addition, work in the competitive electrical power market will require at least an acquaintance with the total variety of energy conversion and conservation alternatives that are, and will become available, for example, small self-generation units and novel conservation techniques. Learning outcomes are described that will be particularly important components in the skill-set of educated energy conversion and conservation engineers.

Background

Over the last 20 years, the airline, bus, trucking, railroad, bus, natural gas and communications industries have been undergoing varying degrees of economic deregulation and restructuring. Now, the last remaining large regulated monopoly industry - the electricity

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Haag, F. (2000, June), Educating Engineers To Make Technological Contributions In The New Competitive Electrical Power Market Paper presented at 2000 Annual Conference, St. Louis, Missouri. 10.18260/1-2--8324