The deregulation of electricity is a controversial issue. American utilities have been regulated by the federal government for many years. The price of the utility, the companies providing them, and health and safety standards were all monitored by the government to ensure safety and fairness from the utilities. Rather than having these utilities run by government bodies, deregulation allows competitive private companies to supply these utilities to the public. Deregulation is often presented to the public as a way to lower the cost of utilities, such as electricity and gas, by creating competition and by preventing any one company or body from having a monopoly on the market.
There are currently 23 states in the US where the sale of electricity is deregulated. There number is expecting to grow even higher in the next few years, and all states are expected to deregulate by the year 2014. Deregulation is usually phased in slowly, with the transition phase being quite long. With more and more states passing bills deregulating the sale of electricity, it is becoming important for consumers to choose the right electricity company. Consumers now have the choice between various retailers, all of which with different prices and special offers.
The term “deregulation” is not 100% factual. Even in states where the electricity is deregulated, it is still often controlled and regulated by a government agency. Government bodies usually still make sure that suppliers are meeting required standards and supplying honest advertising. On top of this, actual electricity supplies in deregulated states usually all originate from the same source as well, making the term “deregulation” a strange one.
Defenders of electricity deregulation claim that the system makes use of commercialism and capitalism to ensure that consumers get the best value for money. They claim that electric deregulation helps to supply customers with more flexible options with regards to electricity supplies and prices. Defenders also argue that it is good for residents to not have to rely on government funding for electricity. If utilities are not sufficient, the private sector can supply funds to have them improved, rather than waiting for the government to step in. A further advantage of this is the potential lowering of taxes.
On the other hand, detractors of utility deregulation claim that prices do not necessarily come down when the sale of utilities are deregulated. People often have concerns about the stability of private suppliers, and worry that they will not retain stable prices the way that a government supplier can.
However, electricity deregulation does give consumers the ability to choose between electricity supplies. Businesses and individuals have the chance to compare different deals, and to switch suppliers if they choose. One of the biggest advantages of the deregulation of electricity is that people will be able to choose the cheapest and best supplier for their individual needs.