Ask "The Expert"
First, a little basic info about why you have a choice.....
Most people have heard about electricity deregulation, but very few understand what it means. In brief, deregulation began as an attempt to restore fairness to electricity markets that have, over the last couple of decades, outgrown the 1930s business model upon which they are based.
Regulation is the legacy of utility business models from years past, which in turn reflected the technology of the times. Prior to 1935, electric companies could and did clutter cities and streets with competing sets of distribution wires and ancillary equipment. Federal legislation passed that year would enable the utility business model as a regional monopoly, so that only one utility company’s infrastructure served a defined geographic area. In this format, a utility offered the simplicity of one supplier with one price schedule. In return for a monopoly franchise, utility businesses were closely regulated by state-chartered public utility commissions. Commissioners were tasked with representing the consumers’ interest by ensuring that the rate for electricity covered the utility’s operating costs while providing a fair return to the utility’s investors—and no more.
By the 1990s, a number of forces began to challenge the classic electric utility business model. Perhaps the most important forces were (1) the escalating cost of fuels needed to generate power; (2) the growing variety of power generation technologies; and (3) the increased willingness of large quantity consumers to relocate their facilities in search of better electric rates, or to simply generate their own power on-site. The economic tension created by these forces demanded resolution. Immediately, questions of fairness come to mind. Why should the large consumer be forced to accept the local utility’s electric rate when it can buy cheaper power in another location? Why should smaller customers subsidize the cost of serving larger ones? Why should the steady investment returns to utility investors be interrupted? If these returns are interrupted, utilities will find it a lot harder to attract investors. The only cure for that is to raise the rate of return on utility investments. In other words, the cost of capital for utilities would escalate, which in turn raises the cost to produce (and the price to buy) electricity. As electricity prices go up, common citizens begin to petition lawmakers for protection. Average citizens (and lawmakers) do not understand the cost-price relationship for producing electricity; many people assume that electricity prices can be determined by the stroke of a pen, regardless of its actual cost of production. Does it not seem unfair to have elected officials decide the price of electricity? Exactly how are they supposed to do that?
Regulation is the legacy of utility business models from years past, which in turn reflected the technology of the times. Prior to 1935, electric companies could and did clutter cities and streets with competing sets of distribution wires and ancillary equipment. Federal legislation passed that year would enable the utility business model as a regional monopoly, so that only one utility company’s infrastructure served a defined geographic area. In this format, a utility offered the simplicity of one supplier with one price schedule. In return for a monopoly franchise, utility businesses were closely regulated by state-chartered public utility commissions. Commissioners were tasked with representing the consumers’ interest by ensuring that the rate for electricity covered the utility’s operating costs while providing a fair return to the utility’s investors—and no more.
By the 1990s, a number of forces began to challenge the classic electric utility business model. Perhaps the most important forces were (1) the escalating cost of fuels needed to generate power; (2) the growing variety of power generation technologies; and (3) the increased willingness of large quantity consumers to relocate their facilities in search of better electric rates, or to simply generate their own power on-site. The economic tension created by these forces demanded resolution. Immediately, questions of fairness come to mind. Why should the large consumer be forced to accept the local utility’s electric rate when it can buy cheaper power in another location? Why should smaller customers subsidize the cost of serving larger ones? Why should the steady investment returns to utility investors be interrupted? If these returns are interrupted, utilities will find it a lot harder to attract investors. The only cure for that is to raise the rate of return on utility investments. In other words, the cost of capital for utilities would escalate, which in turn raises the cost to produce (and the price to buy) electricity. As electricity prices go up, common citizens begin to petition lawmakers for protection. Average citizens (and lawmakers) do not understand the cost-price relationship for producing electricity; many people assume that electricity prices can be determined by the stroke of a pen, regardless of its actual cost of production. Does it not seem unfair to have elected officials decide the price of electricity? Exactly how are they supposed to do that?
The solution to this dilemma was to open electricity markets to competition. Power generation could be accomplished by competing suppliers. Meanwhile, the local distribution and service portions of electricity provision remain the same—it’s still not practical to have competing sets of wires lining the street. By allowing competition among generators, big consumers can get access to lower electricity prices without relocating. But if you open the market to the big consumers, you must open it for all the small businesses and homes, too.
Its Time for YOU to start Saving. I am ready to answer all of your questions call me, "THE Expert"
Steve Banass at
(610) 883-8201
(708) 990-0502 , or
Visit my Customer Friendly Secure Website
email me at energybrokerstevenbanass@comcast.net.
If you know someone who needs FULL TIME WORK have them watch my Hiring Video. And then they can contact me "THE Expert"!
Steve Banass at
(610) 833-8201 Greater Philadelphia Area
(708) 990-0502 National Direct or
email me at energybrokerstevenbanass@comcast.net.
POSITIONS AVAILABLE NATIONWIDE !
Posts
No comments:
Post a Comment