During the late 20th century, the American government initiated the deregulation of the electrical service provider industry in the United States. The belief behind the initiation of this project was that if the electricity service provider industry was deregulated it would save both businesses and consumers. While the natural gas industry has been slowly doing through the deregulation, process due to the complexity of calculations for the electric industry little has been accomplished. It is believed that restructuring the electric utility industry will have a significantly greater impact on not only the way operations are handled but also on the overall cost of energy for consumers. In order to understand deregulation there are several other prerequisites that need to be understood.
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 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.
Due to the essential nature of utility service, it was determined by the government on both state and federal levels that the service be regulated. This was to prevent providers from price gouging as well as encouraging access to these utilities by not only businesses but also individual consumers. Originally, the utility providers were able to obtain monopolies or close to monopolies within a certain geographical region. This geographical region is generally referred to as either, a franchise territory or as a service area. It was originally believed that this would provide a less expensive way to provide reliable service to such a large market due to the high cost of distribution. The geographic monopoly also gave providers the right to decide terms, condition and regulate the overall price presented to consumers.
Because of their monopoly status in a given location, utilities are regulated at both state and federal levels. Federal jurisdiction regulates wholesale interstate transactions while state regulation deals more with consumer-level issues like rates and the quality of service. Despite the safeguards that were supposed to be in place in the form of a Public Service Commission, up until recently the consumer has had very little to say in the amount of rates charged by the utilities and had very little recourse open to them since they had no other choice except to go with the one utility that was operating in their area.
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 to choose from a variety of 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.
One exciting development that could help to move the remaining states along the path to America electricity deregulation was the legislation that President Obama signed into being in June of 2009. This legislation included incentives for utilities that begin switching to cleaner, more renewable sources of generation like the use of solar or wind generators.
Additionally, homeowners and businesses who install generation systems have the opportunity to take advantage of incentives to pay for initial costs as well as having any excess power transferred to the main provider grid. What is more these excess power much be purchased by the providers. A device known as a net meter accurately tracks the wattage, which is brought from a provider and alternatively purchased by the provider. This provides the possibility of significant savings for the owner and an additional source of power for the providers that are not dependent on less effective and efficient energy sources. Experts estimate that savings could hit as high as two billion dollars annually between 2012 and 2042.
There are a number of countries already ahead of the USA when it comes to providing the majority of consumers with clean renewable energy. The more generation systems that are installed the closer the USA comes to these countries and sun and wind power are infinitely renewable and free sources of energy. - 29939
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 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.
Due to the essential nature of utility service, it was determined by the government on both state and federal levels that the service be regulated. This was to prevent providers from price gouging as well as encouraging access to these utilities by not only businesses but also individual consumers. Originally, the utility providers were able to obtain monopolies or close to monopolies within a certain geographical region. This geographical region is generally referred to as either, a franchise territory or as a service area. It was originally believed that this would provide a less expensive way to provide reliable service to such a large market due to the high cost of distribution. The geographic monopoly also gave providers the right to decide terms, condition and regulate the overall price presented to consumers.
Because of their monopoly status in a given location, utilities are regulated at both state and federal levels. Federal jurisdiction regulates wholesale interstate transactions while state regulation deals more with consumer-level issues like rates and the quality of service. Despite the safeguards that were supposed to be in place in the form of a Public Service Commission, up until recently the consumer has had very little to say in the amount of rates charged by the utilities and had very little recourse open to them since they had no other choice except to go with the one utility that was operating in their area.
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 to choose from a variety of 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.
One exciting development that could help to move the remaining states along the path to America electricity deregulation was the legislation that President Obama signed into being in June of 2009. This legislation included incentives for utilities that begin switching to cleaner, more renewable sources of generation like the use of solar or wind generators.
Additionally, homeowners and businesses who install generation systems have the opportunity to take advantage of incentives to pay for initial costs as well as having any excess power transferred to the main provider grid. What is more these excess power much be purchased by the providers. A device known as a net meter accurately tracks the wattage, which is brought from a provider and alternatively purchased by the provider. This provides the possibility of significant savings for the owner and an additional source of power for the providers that are not dependent on less effective and efficient energy sources. Experts estimate that savings could hit as high as two billion dollars annually between 2012 and 2042.
There are a number of countries already ahead of the USA when it comes to providing the majority of consumers with clean renewable energy. The more generation systems that are installed the closer the USA comes to these countries and sun and wind power are infinitely renewable and free sources of energy. - 29939
About the Author:
About the author: Jerry Dyess has been in the Texas Electricity business for the past 7 years. He has published many articles on Texas Electric prices.
