In the past 10 years we have seen a number of initiatives by the American government to deregulate the utility service provider industry and give the power to choose to the consumer. These changes are based on findings, which indicate that deregulation may provide both businesses and consumers with significant energy savings. The natural gas industry has shown significant progress in deregulation, however due to the complexity of calculations for the electrical service providers there had been little in the way of deregulation. However, as a result there has been little restructuring done to this particular utility industry despite the fact that restructuring is believed to be the key to changing the way the industry is handled as well as the cost to consumers. There are a few things to know when looking to understand deregulation and your power to choose.
The first thing to understand is the term utility and what it encompasses, a utility refers to a provider, which has the sole purpose of supplying a commodity. This commodity (energy) must be classified as tangible or it must be a service, which has been determined to be vital to the public. This includes such things such as electricity, water and gas. The role of utility providers includes transportation of the commodity, production and distribution. Electricity providers much generate the power, transport it over wires to the various areas and then distribute to individuals.
Originally, the government determined that due to the vital nature of the utility that regulation of the industry by the government was the best option. This was done primarily to prevent providers from limiting access to the utility and price gouging to the consumers. This lead to geographical monopolies - control of a particular area over to a single utility provider. This was at first believed to provide reliable service over a large distribution area and gave the provider the right to determine the price, conditions and terms of service.
To prevent the misuse of these geographical monopolies both the state and federal government imposed regulations. The federal regulations handle primarily the interstate transactions on a wholesale level. The state regulations handle problems such as quality control and pricing. Despite regulations customers had little recourse and little say in the rates offered due to the monopoly status.
The legislation, which has been put forth for the deregulation of the electricity utility, has several purposes. The primarily goal is to allow the consumer the power to choose from a variety of electricity service providers. This allows for things such as competitive pricing and allows consumers the option of choosing from providers who generate electricity using clean and environmentally friendly methods such as sun and wind power generation rather than coal or nuclear-based production. However, despite this legislation only a few states have been willing to deregulate or are currently in the process of deregulation. Either those states who have not initiated deregulation have done nothing or they have begun and halted research despite the proposed advantages.
Developments in legislation, signed in 2009 by President Obama however may see a renewed interest in deregulation. This legislation offers incentives for service providers who switch to cleaner, renewable forms of energy such as solar and wind.
It also offers incentives such as discounts to homeowners and businesses that switch to renewable energy sources via solar or wind generation. It also compels utility providers to buy any overage these generation systems may incur after the power needs of the business or individual have been met. The energy usage both sold and purchased is measured by a net meter. It is estimated that with the increase in the use of renewable resources and the availability of excess power that savings would be as high as two billion dollars annually between the years 2012 and 2042.
A number of countries have already made the switch or are in the process of transitioning as a country to renewable energy sources. Increasing the number of installed generation systems brings the USA closer to the other countries that have already made the progression to free and renewable resources such as wind and solar power with these resources as long as there are is sun and wind there is available power.
