Historic changes are taking place in the electric power industry.
Until now, your local utility company was responsible for the
production of power, and the delivery of electricity to your home or
business. As a state regulated monopoly, the utility has to submit to
oversight by the Public Utility/Service Commission and justify the
price it charges for electricity. There are three parts of the process
of getting electricity to you: generation, transmission, and distribution.
The generation part is being deregulated. Distribution and transmission services and rates will remain regulated,
and your local utility will continue to operate and maintain these lines and deliver power to your home or business.
Deregulation, also called restructuring, simply means that government
is giving up its power to control something, usually the buying and
selling of a product or service. In the case of electricity
deregulation, about half of the state utility commissions are giving up
their authority to control the price for the generation of electricity
and are letting that price be determined by the marketplace.
Utilities were initially opposed to deregulation, until they
realized they could recover their investments faster and then be free
of a lot of government regulations. Most of these debts, which the
utilities call "stranded costs", are the result of massive nuclear
plant construction cost overruns. These costs are estimated to be
around $200 billion nationwide.
CITIZEN POWER does not support the deregulation of critically needed services
like energy. We are especially concerned about letting the marketplace
determine the price and reliability of electricity supply. The
situation in California clearly demonstrates what can happen when
regulatory control is removed. (For a good explanation of the
California problem by former CITIZEN POWER board member Harvey Wasserman,
However, we are working to try and make deregulation as consumer and environmentally friendly as possible.
Whom Can I Buy Electricity From?
Prior to deregulation, you did not have a choice of who supplies your
energy. Now, you will be able to buy electricity from any supplier
competing for your business. While the names used sometimes vary by
state, the key players in the market are:
Power Generators - companies that actually produce the electricity.
- companies that buy power in bulk and resell it. Most utilities,
including both those in state and out-of-state, have an affiliated
power marketing company.
Brokers or Agents - companies that attempt to match buyers and sellers.
Buying Pools or Aggregators
- a kind of buying club that pools customers together in an attempt to
get better prices. Municipalities, non-profit organizations and
employers may be forming aggregation groups.
As a consumer, you may wonder if switching suppliers is mandatory. This
differs on a state-by-state basis. In most cases you do not have to
pick a new electricity supplier. If you are still getting electricity
from your utility and you do want to shop for a new supplier, you need
to compare the price you are currently paying for generation to the
price being offered by competing suppliers. This price will be called
the "price to compare" or "shopping credit" or "standard offer". This
price often includes the transmission costs as well.
CITIZEN POWER encourages shoppers to seriously consider the environmental
impact of choosing a new supplier. Ask the supplier how the electricity
they are selling is generated. In some states, you can pick a supplier
that offers clean and renewable energy sources for a price equal to, or
only a few dollars more a month than, what you are paying now.
For Pennsylvania electric customers, click
here for a
good shopping guide to assist you in finding a new electricity supplier.
If you want more detailed analysis of the challenges in restructuring
the electricity generation industry, here are three references:
(Some of these documents are in Adobe Acrobat .pdf format. If you need Acrobat Reader, Click here for the free download)