What Is Energy Deregulation In The US?
What is energy deregulation and why is it important? To start off, if there wasn’t energy deregulation then you wouldn’t have the option of choosing your energy provider.
The scope behind energy deregulation is to create more competition between energy providers.
This has taken place in a number of states to stop companies from having a monopoly by keeping energy production and energy distribution separate.
The consumer now has the power to choose their energy supplier and this can affect how much one pays for their energy. It also encourages energy suppliers to be more competitive with their prices as well as offer different product structures.
Let’s have a look at the history of energy deregulation and how it has changed over time.
A Brief Timeline Of Energy Deregulation
Initially, since there wasn’t energy deregulation, the government was the regulating body that decided how much the consumer should pay for energy.
When The Great Depression came about in 1929, many businesses including energy companies, crashed.
This made energy difficult to regulate and just a few years later, a large majority of the electric industry in the US was owned by just eight utility companies.
Because of this reason, the US government created the Public Utilities Holding Company Act in 1935.
It was the US government’s first attempt at regulating the energy industry. This act was one of the most important ever created and still influences the way the energy industry functions today.
The 1970’s energy crisis affected not only the US but many countries across the world, including Canada, Western Europe, Australia and New Zealand.
The energy crisis was brought about by a shortage in petroleum. This caused the price of energy to rise a lot which caused a significant shortage in fuel.
In 1992, the government passed the National Energy Policy Act. This act created the outline for a competitive wholesale electricity generation market.
The National Energy Policy Act also led to the creation of a new type of energy producer known as the EWG (Energy Wholesale Generator). The EWG’s functioned under different regulations and so found it easier to enter the market. The act aided in the deregulation of energy in the US because it allowed competition in the private market for electricity distribution.
In 1996, transmission services separated from power plants due to Order 888. This order entailed utilities to make available “open access non-discriminatory transmission services” (electricchoice.com, 2016) and because of these changes, many states slowly began the process of energy deregulation.
President Bush signed the Energy Policy Act in 2005. The act transferred the regulation of utilities from the Securities and Exchange Commission to the Federal Energy Regulatory Commission (FERC). The FERC became the primary regulator for energy in the US.
Image Source: business.directenergy.com
Why Is Energy Deregulation Important?
There are a number of reasons why energy deregulation is important, all of which we will be exploring below.
Energy Deregulation helped to lower prices for consumers
One of the main reasons energy deregulation is important is because it allows for competitive prices to exist amongst energy providers. This means the consumer has more options when deciding who they should buy their electricity from; finding them the best prices and packages.
Energy Deregulation could help in the fight against climate change
You might feel that it might be a bit too naive to expect that claiming that energy deregulation could help in the fight against climate change.
So, let us explain.
The consumer has the option to choose their energy provider because of energy deregulation, so this allows consumers to decide how the energy market generates electricity by exercising his right to vote with dollars.
The consumer now has the ability to choose energy providers with green practices that could be aiding in the fight against climate change.
It could also force energy providers that still use fossil fuels to switch to cleaner methods of generating energy.
Does Your State Have A Deregulated Market?
Below are a list of states that have a deregulated energy market (electricity):
- New Hampshire
- New Jersey
- New York
- Rhode Island
- Virginia (Limited)
- Washington D.C.
If You Don’t Live In A Deregulated Electricity Market
- Opt for a green energy provider to source your energy
- On this site, you can enter in your zip code and find lists of websites which offer you many energy provider options and the prices.
2. Get involved in your local community
– Contact your local representative. Speak to them about energy deregulation and what can be done in your area.
– Go to local town meetings and inform people. Become informed and then inform your community on the benefits of energy deregulation and how this can benefit your local community and the environment.
One person can influence others to make a change, so why not be the one to do so?
– Online petitions. There is always some uncertainty on whether online petitions actually work.
This may be because we don’t see any immediate results or simply because we forget to follow up on the issue. Also, just because a petition doesn’t have the desired outcome doesn’t mean it was unsuccessful. Large amounts of people voicing their opinion on any matter at hand is bound to have some influence or start a snowball effect that may build momentum.
Now it’s up to you. Get informed on energy deregulation in your state and begin making a difference. We truly believe that you, the consumer, will use your power to make a difference in protecting our planet.
We hope this article has been useful in informing you about the basics of energy deregulation and the ways you can assist in fighting against climate change.
We invite any opinions or comments you may have to add to this discussion.