In the1990s the Federal government embarked on a policy of deregulating the electricity industry in America. It was believed that this America electricity deregulation would help American businesses and consumers save money on electricity. Even though the deregulation process has been going on in the natural gas industry for well over a decade, little has been done with American electric utility operations and rates since they are much more complex to figure. As a result of this, it is believed that electric utility restructuring will have a far greater impact on facility energy costs for consumers and the way operations are handled in coming years. Before we discuss this deregulation, there are a few concepts that we better need to understand.

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.

Since utility service is such a vital need, it has been determined by both state and federal lawmakers that it is in the public’s interest to regulate how it is provided. To keep utilities from causing the consumer to suffer price gouging and to encourage widespread access by individual consumers, the government originally gave individual utilities certain monopolistic rights to sell energy within a specific territorial area, known in the industry as the “service area” or “franchise territory.” In the days when the utility was first conceived of, it was believed to be less expensive to provide any given mass market in a defined geographic territory with utility services from a single supplier because of the high cost of distribution. This monopoly was accompanied by the right of the utility to regulate price as well as service terms and conditions that the consumer had to abide by.

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.

Electricity deregulation legislation however, is designed to make it possible for the consumer to choose from a number of service providers. This encourages competitive pricing and offers the potential for savings to the consumer. It also allows customers to choose companies, which offer environmentally friendly and renewable energy sources such as wind, or solar generation rather than choosing a provider that uses power generated by coal or nuclear means. Coal still accounts for more than a third of the power generated in the USA. In spite of the deregulation legislation, only a few states have implemented or are in the process of implementing a competitive market. The remaining states either have done nothing or have halted any further study into deregulation despite 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.

In addition, individuals like homeowners or businesses that install smaller generation systems will be offered monetary incentives to help pay for the costs of the initial system. This legislation also compels electrical utilities to purchase any excess wattage that the individual generates which is above and beyond what is needed to power the business or home. A net meter, a device that keeps accurate track of wattage bought from or sold to a utility, can provide not only a significant possible energy savings to the owner of the generation system (experts estimate a savings of between one to two billion dollars annually between the years 2012 and 2042), but also serves to provide additional energy that is not dependant on dirty, dwindling fuels like burning coal that not only is less efficient to use, but is also more costly in terms of the devices needed to be factored in to make them cleaner and less injurious to the environment.

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.

About the author: Jerry Dyess has specialized in Texas Electricity for the past 7 years. Get more information on Texas Electric rates.