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Citizen Power 2121 Murray Ave Pittsburgh, PA 15217 (412) 421-6072 (412) 421-6162 Fax info@citizenpower.com	Citizen Power Reports Electricity Deregulation: What's it all about? If electricity deregulation is happening in your area, like most people, you are probably wondering why it is happening and are confused about the details. That is probably why the great majority of electric customers have not switched to a new supplier. Citizen Power does not support the effort to deregulate the electric generation industry, but since it is happening, we are working to make the rules favorable to residential-particularly low income-and small business customers. We also have concerns about how deregulation will impact the environment. A big part of our work is taking complex information and putting it into plain language to help customers understand what is going on and, hopefully, to get them to participate in the decision making process. This is the only way that the rules that determine how the new market place will function will insure that the promised benefits of deregulation are actually realized. First some basic information: There are three production stages to getting electricity to you, [GRAPHIC] the first is generation, the actual plant that creates the electrons, i.e., coal, gas, nuclear, wind turbine, etc. Then there are the transmission lines, the high tension voltage wires and towers that carry the electricity to the distribution system, the poles and lower voltage lines that bring the power to your house, school, church or place of business. It is the generation part of the electricity production that is being deregulated. The transmission and distribution parts will continue to be regulated by the state and federal government, respectively. That means, that even if you pick a new electricity supplier, your local distribution company will still maintain the wires, poles, substations, etc. to make sure the power gets to you. What deregulation really means is that the government (state public utility/service commission) is giving up its authority to control the price of the generation part of electricity production. Once deregulation is in full swing, the market will determine the price of electricity generation. And the expectation is that, if there is a robust competitive market, the price will not be higher than it should be. Citizen Power is concerned about potential problems associated with deregulating the electric generation industry, including (1) anti competitive practices, (2) system reliability and (3) the environmental consequences of energy use. The summer 2000 price spikes that occurred in San Diego, the first area of the U.S. to be fully deregulated, may foretell what other parts of the country will experience in a deregulated market. Citizen Power is working for rules that will insure that those who own generation capacity and the distribution systems do not use their power to keep out competitors or drive up the price of electricity. We believe it is going to be very difficult to make deregulation of this industry work, when most of the generation capacity and all of the transmission lines-the arteries of competition-are owned by one (or a few) of the competitors in a market. At the very least, utilities must turn over the control of their transmission lines to an Independent System Operator (ISO) or Regional Transmission Organization (RTO). This is the only way suppliers will be able to get power to the consumer at a competitive price. Our second concern has to do with product reliability. Electricity is not like any other product. We can live without a telephone or cable TV, but electricity has become a necessity. However, unlike other necessities (e.g., gas or water), electricity production and distribution is more complex. Because electrons cannot be stored, it is necessary for power production to be matched with consumption. Thus, projection of growth in demand and, if necessary, constructing capacity in time to meet that demand, are an absolute necessity. Insuring this happens in a coordinated way may disappear with deregulation. Third, we see this period as the moment when the U.S. either seizes a historic opportunity to change the way we produce and use energy, or fails to create the kind of marketplace that will allow entry of new energy technologies. Should deregulation be done in a way that permits a move from regulated to unregulated monopolies, we are likely to see the continued encouragement to waste energy and the use of outdated methods of producing electricity will have an unfair advantage. For example, instead of increased use of renewable energy sources and the efficient use of energy, we are likely to see increased use of dirty coal and unsafe nuclear capacity and continued dependence on foreign energy sources. To find out about deregulation in your area, click here, or go to our links page for connections to worldwide energy information. Return to CP Reports Main Home \| Search \| Feedback \| Links

Citizen Power
2121 Murray Ave
Pittsburgh, PA 15217
(412) 421-6072
(412) 421-6162 Fax
info@citizenpower.com

Citizen Power Reports

Electricity Deregulation: What's it all about?

If electricity deregulation is happening in your area, like most people, you are probably wondering why it is happening and are confused about the details. That is probably why the great majority of electric customers have not switched to a new supplier. Citizen Power does not support the effort to deregulate the electric generation industry, but since it is happening, we are working to make the rules favorable to residential-particularly low income-and small business customers. We also have concerns about how deregulation will impact the environment.
A big part of our work is taking complex information and putting it into plain language to help customers understand what is going on and, hopefully, to get them to participate in the decision making process. This is the only way that the rules that determine how the new market place will function will insure that the promised benefits of deregulation are actually realized.
First some basic information: There are three production stages to getting electricity to you, [GRAPHIC] the first is generation, the actual plant that creates the electrons, i.e., coal, gas, nuclear, wind turbine, etc. Then there are the transmission lines, the high tension voltage wires and towers that carry the electricity to the distribution system, the poles and lower voltage lines that bring the power to your house, school, church or place of business.
It is the generation part of the electricity production that is being deregulated. The transmission and distribution parts will continue to be regulated by the state and federal government, respectively. That means, that even if you pick a new electricity supplier, your local distribution company will still maintain the wires, poles, substations, etc. to make sure the power gets to you.
What deregulation really means is that the government (state public utility/service commission) is giving up its authority to control the price of the generation part of electricity production. Once deregulation is in full swing, the market will determine the price of electricity generation. And the expectation is that, if there is a robust competitive market, the price will not be higher than it should be.
Citizen Power is concerned about potential problems associated with deregulating the electric generation industry, including (1) anti competitive practices, (2) system reliability and (3) the environmental consequences of energy use. The summer 2000 price spikes that occurred in San Diego, the first area of the U.S. to be fully deregulated, may foretell what other parts of the country will experience in a deregulated market.
Citizen Power is working for rules that will insure that those who own generation capacity and the distribution systems do not use their power to keep out competitors or drive up the price of electricity. We believe it is going to be very difficult to make deregulation of this industry work, when most of the generation capacity and all of the transmission lines-the arteries of competition-are owned by one (or a few) of the competitors in a market. At the very least, utilities must turn over the control of their transmission lines to an Independent System Operator (ISO) or Regional Transmission Organization (RTO). This is the only way suppliers will be able to get power to the consumer at a competitive price.
Our second concern has to do with product reliability. Electricity is not like any other product. We can live without a telephone or cable TV, but electricity has become a necessity. However, unlike other necessities (e.g., gas or water), electricity production and distribution is more complex. Because electrons cannot be stored, it is necessary for power production to be matched with consumption. Thus, projection of growth in demand and, if necessary, constructing capacity in time to meet that demand, are an absolute necessity. Insuring this happens in a coordinated way may disappear with deregulation.
Third, we see this period as the moment when the U.S. either seizes a historic opportunity to change the way we produce and use energy, or fails to create the kind of marketplace that will allow entry of new energy technologies. Should deregulation be done in a way that permits a move from regulated to unregulated monopolies, we are likely to see the continued encouragement to waste energy and the use of outdated methods of producing electricity will have an unfair advantage. For example, instead of increased use of renewable energy sources and the efficient use of energy, we are likely to see increased use of dirty coal and unsafe nuclear capacity and continued dependence on foreign energy sources.
To find out about deregulation in your area, click here, or go to our links page for connections to worldwide energy information.

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