Deregulation of US Electricity Markets: A Game-Changing Opportunity

The deregulation of electricity markets is gaining momentum, with policymakers facing a choice between facilitating this change or being overtaken by the market. Richard C. Green, Jr., chairman and president of UtiliCorp United, pointed out that consumers in California are paying high rates for electricity, while cheaper power is available in the Pacific Northwest, blocked by regulatory restrictions. Deregulation of natural gas has already demonstrated consumer benefits, with prices declining by 24%, 29%, and 50% for residential, commercial, and industrial customers, respectively, since 1984.

Key Takeaways:

• The deregulation of electricity markets has the potential to bring economic benefits to consumers, as seen in the deregulation of natural gas which resulted in price declines of 24%, 29%, and 50% for residential, commercial, and industrial customers, respectively, since 1984.
• The regulatory environment is preventing utilities from accessing cheaper power, forcing consumers to pay high rates. As an example, consumers in California are paying high rates, while cheaper power is available in the Pacific Northwest.
• The government itself is a victim of the regulatory straitjacket, preventing the Defense Department from shopping for lower rates, causing unnecessary costs to taxpayers, estimated to be in the hundreds of millions of dollars.
• Informed consumers are demanding choice among energy suppliers, products, and solutions, highlighting the need for deregulation to meet these evolving customer needs.
• UtiliCorp United, a leading international electric and gas company, has successfully navigated deregulation through mergers and acquisitions, and the launch of non-regulated energy-related businesses.
• Richard C. Green, Jr., chairman and president of UtiliCorp United, emphasized that government has the option to facilitate deregulation and bring about consumer benefits, or risk being overtaken by the market.

Statistics:

• Residential customers seen a 24% decrease in natural gas prices since 1984, with commercial customers experiencing a 29% decrease, and industrial customers experiencing a 50% decrease.
• The Defense Department is prevented from shopping for lower rates due to regulatory restrictions, causing unnecessary costs to taxpayers estimated to be in the hundreds of millions of dollars.
• UtiliCorp United is an international electric and gas company with energy customers and operations across the United States and in Canada, Great Britain, New Zealand, Australia, and Jamaica.

Sources:

• Business Wire, Sept. 26, 1995
• Richard C. Green, Jr., chairman and president of UtiliCorp United.