What is deregulation?
Ever since the creation of electricity,
people have been searching for the best deals on how to get it. At first, it was
only available to those who knew how to produce it themselves, then to anyone
with a watermill, and then to anyone who knew how to convert coal to power.
However, as with all things that can turn a profit for the government, the
creation and distribution of electricity was regulated by those in power, mass
produced to reach every inhabitant in a certain area, and eventually became a
necessity as opposed to a luxury.
In most states, inhabitants do not get to
choose where they get their power from or who delivers it to them. This is
because most states are still working on the regulated electricity system. The
regulated system has been almost universally adopted because there is little
strain on the consumer or the provider in getting power to a certain home or
office. The regulated system is also preferred because it has a high price cap,
or maximum price providers can charge for power delivery, and providers can
therefore keep up with rising gas prices by passing the difference off to the
consumers. While consumers do not like this and will feel the pinch as time goes
on, providers prefer this system as they need the gas to produce the
electricity.
In the late 90s and early 2000s, the state of
Connecticut switched from the regulated system in preference of the deregulated
system of providing electricity to the state's growing population. Their theory
behind this was that by giving the taxpayers the choice of where they want to
get their electricity from but still having the same company deliver the power,
the state's population would skyrocket bringing in more consumers and thereby
boosting the economy. The deregulated system works like this: consumers choose
what company produces their electricity, the providers of that consumer's
particular area will transfer the electricity from the producer, and then
deliver the power to the consumer at a lower rate.
While consumers love this idea, it is a
stress on the electricity providers because they are losing income if they are
not able to produce electricity for the lowest cost in the competitive market.
There is also a much lower price cap in the deregulated system. Again, consumers
love this aspect but it is hard for the producers and the providers who rely on
being able to raise prices as gas prices steadily increase. It takes massive
amounts of oil to produce enough electricity to power an entire city, let alone
an entire state, and since there is no price cap on oil, the fact that power
companies are restrained in their pricing is holding back the power economy's
growth in that area.
There are movements being made to raise the
price cap or give a larger tax break to power companies who invest heavily in
the oil companies but until then, the strength of the Connecticut Power
Deregulation system lies in the hands of the consumers. The opportunity to
choose a producer who offers the best prices for the quality of power a consumer
is looking for without having to worry about being out of that producer's
delivery area is a breakthrough in helping the population battle rising gas
prices and home mortgage rates.