The History of Energy Deregulation in The United States In 1935, Congress passed the Public Utility Holding Company Act (PUHCA). This law set about the restructuring of the electric and gas utility industries, requiring companies to do away with subsidiaries. Utility Companies were limited to a single, geographically integrated system that was easier to regulate. This meant that a person's electricity provider was determined by where they live. Prior to this, the electric grid was controlled by a large number of private investors and trusts which used competing transmission systems. Essentially, this created the system of regulated energy that most people are familiar with today. During the 1970’s, the United States faced an energy crisis when the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo. The U.S. was heavily dependent on oil from this region and the result was a sharp rise in energy prices. In response, Congress enacted the Public Utility Regulatory Policies Act (PURPA) which required utility companies to purchase their energy from private companies when they could supply power at a lower cost than the public utility. The law’s stated purpose was to provide, “increased conservation of electrical energy, increased efficiency in the use of public facilities and resources by electric utilities and equitable retail rates for electric consumers.” In 1992, Congress enacted the National Energy Policy Act which stated, “Agencies are authorized and encouraged to participate in programs to increase energy efficiency and for water conservation or the management of electricity demand conducted by gas, water, or electric utilities and generally available to customers of such utilities.” Private market competition was supported in the wholesale generation of energy. The National Energy Policy Act was fundamental in setting the country down the road to more energy deregulation. In 1996, the Federal Regulatory Commission (FERC) issued order 888 which required utilities to provide, “open access non-discriminatory transmission services” to independent producers. This separated power plants from the transmission services, breaking up parts of the vertical integration system used by public utilities companies. That same year, California passed partial deregulation legislation which would have later repercussions. By 1999 New York, Massachusetts, Pennsylvania, Rhode Island, Texas, and California had all pushed forward legislation to allow consumers access to private power suppliers. FERC issued
order 2000 which called for the creation of RTOs (Regional Transmission Organizations), designed to replace state control and operation of the transmission grid. By 2000, 24 states had passed laws allowing utilities to sell their power plants to private companies, or transfer them to unregulated affiliates. However, the California Energy Crisis created uncertainty amongst many of the states hoping to pass deregulation legislation. The state saw rolling blackouts and high electricity rates. Arizona, Arkansas, Montana, Nevada, New Mexico, Oklahoma, Oregon, and West Virginia repealed or delayed legislation. In 2005, President Bush signed The Energy Policy Act which transferred oversight of public utilities from the SEC to FERC. This also repealed the 1935 PUHCA law. As of 2012, there are 16 states which have implemented deregulation policies and given consumers the power to choose energy providers. Some of them have suspended these policies, while others remain in effect. This includes New York, New Jersey, Maine, Connecticut, Ohio, Michigan, Illinois, Massachusetts, Maryland, Oregon, Rhode Island, Texas, Montana, Pennsylvania, and Washington D.C. For more information visit us at http://www.shopmypower.com
Published on Sep 27, 2013
Since 1935, United States public utilities have provided the bulk of energy to the nation. These are highly regulated, vertically integrated...