Do you remember when they broke up Ma Bell so we could have more choices? Now it’s available in the energy field!

Deregulation, also known as restructuring, is a process that allows customers to choose their electricity provider and gives rise to competition in the energy market.  This process began in the 1990s and has been implemented in about 40% of US states. 

Here are some of the effects of deregulation:

• Customer choice: Customers can select an electricity supplier instead of being required to buy from their local utility. 
• Lower costs: Competition between suppliers leads to lower prices. 
• Improved service: Energy users have more options for rates, terms, and specialized products. 

Some states have deregulated only electricity, while others have deregulated both electricity and natural gas. Some states that have deregulated electricity include: 

Connecticut, Delaware, Maine, Massachusetts, New Hampshire, and Texas.

California was a leader in the deregulation movement, passing AB 1890 in 1996. 

In traditionally regulated areas, utilities act as a monopoly, so customers can only buy power from them. To ensure electricity rates are fair, state regulators supervise how these utilities set prices. Retail electricity prices are based on recovering the utility’s costs and a fair profit on investments (together called a revenue requirement). This requirement needs approval from the state’s public utilities commission to stop overcharging customers.

https://www.rff.org/publications/explainers/us-electricity-markets-101/#:~:text=Beginning%20in%20the%201990s%2C%20many,energy%20suppliers%20that%20owned%20generators.