Electric Utility Deregulation
In the interest of providing the public with the lowest possible rates and a selection of service options, the U.S. electric utility industry is now in the process of being deregulated. This allows power plants to compete for your business, and as we all know, competition breeds savings for consumers.
It also changes the electrical utility industry into two distinct types of services: The companies that transmit power from the electrical generating station to your home or business (they own the poles, transformers, wires, etc…these are called “the distributors”); and the companies who actually operate power plants (“the generators”) and feed electricity into the distributors’ power grids. Of course, some companies are both generators and distributors. Still, deregulation allows you to choose who actually generates the power you consume, and you are free to choose the company that generates electricity in the most cost-effective manner and therefore can sell it to you at the best price.
In 1978, Congress passed the Public Utility Regulatory Policies Act which laid the groundwork for deregulation and competition by opening wholesale power markets to nonutility producers of electricity. Congress voted to promote greater competition in the bulk power market with the passage of the Energy Policy Act of 1992. The Federal Energy Regulatory Commission (FERC) implemented the intent of the Act in 1996 with Orders 888 and 889, with the stated objective to “remove impediments to competition in wholesale trade and to bring more efficient, lower cost power to the Nation’s electricity customers.” The FERC orders required open and equal access to jurisdictional utilities’ transmission lines for all electricity producers, thus facilitating the States’ restructuring of the electric power industry to allow customers direct access to retail power generation.
As a result of the Federal and State initiatives, the electric power industry is transitioning from highly regulated, local monopolies which provided their customers with a total package of all electric services and moving towards competitive companies that provide the electricity while utilities continue to provide transmission or distribution services. States are moving away from regulations that set rates for electricity and toward oversight of an increasingly deregulated industry in which prices are determined by competitive markets.
(source: United States
Department of Energy) |
