Pursuant to a congressional request, GAO provided information on: (1) changes in the amount of funding for electricity-related research and development (R&D); and (2) the impact of these changes on the types of R&D being funded.

GAO found that: (1) Department of Energy (DOE) funding for electricity-related R&D increased between fiscal years (FY) 1993 and 1995, but began to decrease by FY 1996 due to budget constraints and congressional appropriation committees' recommendations; (2) the electric utility industry began to reduce R&D funding in 1993, and R&D managers expect the decreases to continue as the industry prepares for deregulation and increased competition; (3) some state programs are also experiencing funding reductions, primarily due to decreases in contributions from utilities, oil overcharge revenues, DOE funding, and state appropriations; (4) proprietary data and industry restructuring make it difficult to assess the current level or project future levels of industry spending on electricity-related R&D; (5) many utilities are shifting their R&D focus from collaborative, long-term projects to proprietary, short-term projects to gain a competitive edge; (6) some R&D projects are being delayed, scaled down, or cancelled as a result of the funding reductions; and (7) DOE, industry, and state government officials who expressed concerns about electricity-related R&D funding suggested such alternative funding sources as a state-administered surcharge on all retail sales of electricity and a national wires charge on all electricity entering the transmission grid.