The History of Electricity Deregulation

In 1935, Congress passed the Public Utility Holding Company Act, which limited electrical companies to certain geographical areas. Along with gas companies, the law forced electrical suppliers to shed any subsidiaries they might have. As a result, electrical consumers ended up being tied to their local utility company, accessed via a state-owned network.

The Start of Deregulation
The regulated system remained largely unchanged until the 1970s, when the oil crisis led Congress to enact the Public Utility Regulatory Policies Act. In order to reduce waste in the energy supply sector, this law essentially forced utility companies to buy their energy from private companies, rather than public utilities. This opened up the market to some extent.

Deregulation in the 1990s
By the early 1990s, Congress had enacted the National Energy Policy Act which further deregulated the market. The new law fostered greater competition in the wholesale electricity supply sector and was the cornerstone for further deregulation to follow. In 1996, the Federal Regulatory Commission began requiring all utilities to offer open access to 'transmission services' on a 'non-discriminatory basis'. This meant that, for the first time, independent electrical producers could access the grid to supply electricity on a much more level playing field. The change effectively broke up the fully integrated system which had operated since the 1930s.

The Role of the States
In 1999, events took another turn which would have ramifications for domestic consumers and landlords alike. The states of New York, California, Massachusetts, Pennsylvania, Rhode Island, and Texas passed new laws allowing private electrical suppliers to deal directly with consumers. Under the increased competition that immediately followed this move, landlords in these states were able to shop around for the best prices from electrical suppliers and to strategize their electrical supply. Just one year after this move, no less than 24 states had passed legislation which allowed utilities to sell power plants to private investors. Nevertheless, the California Energy Crisis of 2000 did cause some states to delay the implementation of their deregulatory legislation – and in some cases to repeal it.

Recent Deregulation History
Despite the setback seen in some states, deregulation of electrical supply has continued. By 2005, President Bush transferred the public oversight of utility companies to the Federal Regulatory Commission and finally repealed the Public Utility Holding Company Act some 70 years after it was passed. It is true to say that regulated markets continue to this day in the United States in states like Florida, Idaho, and Kentucky. These states retain the old, vertically integrated system of electrical generation and supply. Today, most of the 24 deregulated states are in the Northeast and Mid-Atlantic, although Oregon, Texas, and California -- which is now partially deregulated -- are exceptions to this geographical rule.

Landlords who own anything from a single home to a large portfolio of properties in a deregulated state can take advantage of the open marketplace. Of particular interest to electrical companies are landlords who have several dwellings occupied by tenants at any one time, and it is here where the best deals can often be found.

POSTED June 23 2015 1:41 PM

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