Each year, more and more states continue to implement a deregulated energy policy allowing their electricity and gas customers to shop for lower rates amongst competitive suppliers entering the marketplace. With over half of the states deregulated now for electricity and/or natural gas, this change is sweeping the nation and providing new and exciting opportunities to millions of customers to save a lot of money on their utility bills each month as well as better utilize renewable energy sources.
Currently, approximately 25 states have deregulated electricity and/or natural gas.Some of these states include Connecticut, New York, New Jersey, Pennsylvania, Ohio, Illinois, New Hampshire, Michigan, Texas and Georgia. However, approximately seven states have suspended their deregulation programs and it’s unknown when (or if) these seven states will re-enact the deregulation legislation.
Meanwhile, 17 states have enacted natural gas deregulation laws. Nearly all of these 17 states are still pilot programs or limited programs.Eleven of these states have also deregulated electricity, although some of the electric choice programs are suspended.
For decades, American residents and business owners across America have been subject to the electricity and gas rates provided by the utility in their area. In the early 1990s, the federal government began enacting laws to pave the way for states to deregulate energy. In 1992, the federal government passed the National Energy Policy Act, which enabled energy suppliers to start selling competitively priced energy to consumers.
The biggest change came with Order 888 from the Federal Energy Regulatory Committee in 1996. This Order said that utility companies must open their transmission lines so that suppliers and competitors could deliver their energy to residential and business consumers. Now suppliers simply negotiate their own rates with the power plants and send the power out for delivery using the utilities infrastructure.
California became the first state to deregulate electricity. They had high hopes for success which, unfortunately, ended in the California electricity crisis, also known as the Western U.S. Energy Crisis of 2000 and 2001. California had a shortage of electricity supply for customers caused by market manipulations, illegal shutdowns of pipelines by the Texas energy consortium Enron and capped retail electricity prices. This caused an economic crisis and took some time to recover. Today, California has new plans for deregulation and when they step into the arena again, you can be sure they will do it right. Fortunately, they now have several other states to model after that have incorporated successful deregulation policies.