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A deregulated energy market allows competitive utility companies to buy and sell electricity and natural gas by allowing market participants to invest in transmission lines and power plants. Owners will then sell this wholesale market to retail suppliers. The local utility company maintains responsibility for electricity and natural gas distribution in deregulated markets. However, the energy supplier you choose to work with will determine the pricing. Market competition ensures that the pricing will be competitive and fair. With regulated energy, consumers have no choice but to purchase electricity and natural gas from the local utility at prices regulated by the state and federal government in regulated markets.
Deregulation allows energy users to choose where their energy comes from and will enable them to pick the best plans. Increased competition and better service. Energy deregulation became law to break up utility providers' electricity and natural gas monopolies. Before deregulation became law, local utility companies could own the generation plants that produce energy and hold the transmission and distribution infrastructure utilized to deliver the electricity to consumers.
Charge rates to their customers based on randomly changing market prices and be guaranteed to make a consistent profit every year.
Energy consumers can now examine options for better prices for their natural gas or electricity supply from retail energy providers. Energy suppliers work with your utility company to provide the actual electricity or natural gas supply, which means your emergency service and delivery is unchanged. Everything stays the same. The quality and reliability of your electricity or natural gas service remain unchanged since the cables and underground pipelines are still the responsibility of your utility. Energy suppliers create the energy that utility companies buy then sell to the consumer to simplify things.
Those in favor of energy deregulation feel that competition has helped drive down prices. Critics argue that supply rates have not gone down and believe they have increased in some areas. However, these opinions do not consider the large number of customers who have yet to take advantage of energy choice programs available to them. Those customers are still, on average, paying higher prices to their utility for their energy supply. The utility cannot profit from the pool and has no incentive to shop for the best available rates. As more customers switch to a retail energy supplier, average energy prices continue to be more beneficial because retail energy suppliers compete against each other for the consumer's energy business.
Many of America's sectors were unregulated until the stock market crash of 1929 and the resulting Great Depression. Franklin D. Roosevelt’s administration enacted many forms of financial regulation, and President Roosevelt passed the Securities Exchange Acts of 1933. The Securities Act of 1933 was passed into law to protect investors after the stock market crash of 1929. The Securities Act of 1933 intended to create an open window into the financial statements of corporations. President Roosevelt made a strategic move to ensure that, in the future, sectors, significantly the energy sector, could be held accountable for the sale of securities during any financial crisis. The legislation addressed the need for better disclosure by requiring companies to register with the securities and exchange commission. They ensure that companies provide the SEC and potential investors with all relevant information utilizing a formal document that is required by and filed with the securities exchange
commission.
In 1935 congress passed the Public Utilities Holding Company Act (PUHCA). Its passing was a vital energy act for the United States as it was the government's first genuine attempt to bring regulation or rules into the energy industry. Nonetheless, it was and remains one of the essential factors in how the energy industry conducts itself today. The Securities and Exchange Commission became responsible for approving a holding company that wanted to participate in the non-utility business. All holding companies needed to register with the Securities and Exchange Commission. The Securities and Exchange Commission then limited the holding company to ownership of one integrated system.
The goal of PUHCA was to prevent holding companies from recovering their expenses twice, and this was something that frequently occurred when a utility operated in multiple states. The act achieved this goal through SEC-approved formulas that helped ratepayers of a particular state only pay for the share of everyday service company expenses. By 1948, holding companies divested around $12 billion in assets due to the new regulations outlined in PUCHA. A significant effect that the PUCHA had on customers was that they prevented a utility from artificially raising cost-based regulated rates.
The National Policy Act became law in 1992. The act itself created the outline for a competitive wholesale electricity generation market, and it also created a new energy producer known as the Exempt Wholesale Generator (EWG). EWG’s did not have the same rules or regulations, making it more straightforward to enter the market. This act states, “Agencies are authorized and encouraged to participate in programs to increase energy efficiency and for water conservation or the management of electricity demand conducted by gas, water, or electric utilities and generally available to customers of such utilities.” This act allowed for private market competition within the wholesale generation of electricity. This element alone truly helped pave the way for energy deregulation within the United States.
The Energy Policy Act, signed by President Bush in 2005, transferred the regulation of utilities from the Securities and Exchange Commission to the Federal Energy Regulatory Commission (FERC). This organization originated as a part of the Department of Energy. However, it determined that it would better function as the primary regulator for energy within every state across America. Due to the changes implemented by the Energy Policy Act, several amendments also had to be made to the PUCHA created in 1935.
In conclusion, the deregulation of energy by the United States government has been happening for many decades. The energy sector became a monopoly by utility companies and customers not having options on pricing matters. The playing field has changed, and it benefits the customers in the states that offer deregulated energy. The customer shops around and see which companies offer the best rates, not just a plan created around their needs but designed to be financially sound. At Thatcher Energy, our goal is for our customers to sleep warm and soundly at home, knowing the money they are saving on energy needs can go into their savings account.
