Monday, July 4, 2016
The Deregulation of Electricity Markets: A Brief History
Today, 17 states across the nation have varying degrees of deregulated energy markets. In the future, that number is only likely to grow.
Why is the deregulation of electricity markets such a big deal, and why is it only a relatively recent occurrence? Learn about the history of energy industry deregulation with this quick timeline.
1935: The Public Utility Holding Company Act (PUHCA)
Congress passed PUHCA during the Great Depression era as part of Franklin Roosevelt's widespread trust-busting campaign. Back then, eight utility companies controlled 73% of the country's electrical grid. The act limited the geographic reach and scope of energy suppliers by putting them under state-by-state regulation.
1978: Public Utility Regulatory Policies Act
This act came as part of the 1978 National Energy Act, which itself was a response to the energy crisis of 1973. In an attempt to promote domestic and renewable energy companies along with consumer-based conservation initiatives, this act enabled non-utility generator companies to produce power -- a small first step towards eventual deregulation.
1992: National Energy Policy Act
The deregulation of electricity markets took another step forward in 1992 with a congressional reform of PUHCA. This act expanded the choices for utility companies in sourcing their energy, which aimed to help smaller utility companies compete with larger ones.
1996: Federal Energy Regulatory Commission Order 888
By 1995, electricity delivery cost from investor-owned utilities averaged seven cents per kilowatt hour; two-thirds of that cost came from electron generation itself. Order 888 from FERC allowed for open competition between energy providers in hopes to drive down energy costs, though jurisdiction still ultimately fell to individual state regulation.
2005: Energy Policy Act
This act finally repealed 1935's PUHCA, which seemed no longer relevant to many. Today, electron generation makes up less than half of the costs of electricity, and open market competition, thanks to the deregulation of electricity markets, continues to have an impact on consumer price, choice, and freedom.
When it comes to the most efficient and cost-effective method of providing your home with energy, the long process of deregulation has only just begun. Find out if your state allows for consumer choice in deregulated energy markets and consider your options today.