There is no better way to describe or explain the evolution of the electricity industry than by comparing it to what happened in more progressive industries. In a series of blog entries I will try to simplify the electricity industry using examples that help my own understanding. Hope it helps yours too…
Deregulation: Remember when it was just ‘Ma Bell’ who provided phones to those who could afford it? And remember when the 1996 telecommunications act came in and more people could then provide you your telephone service for cheaper? I’m sure you remember (if you’re above a certain age anyway). Well, even back then other phone providers could not afford to build the phone lines and cables than ran across the country. So they ‘paid a toll’ for access to those wires and cables from Ma Bell.
Now think 2007 instead of 1997 and replace Ma Bell with Comed. Think Retail electricity Act instead of the Telecommunications Act of 1996 and replace the ‘other companies’ with Nordic Energy, Constellation etc and you have the exact same situation.
As is the case with anything new, problems came with the changes in regulations but it also brought opportunity for the customer to have more of a voice. All you have to look at is your cell phone (and even that obnoxious person on the train) and see the benefit of those changes. Expect the same in the electricity industry.
Real Time Pricing: again I’ll turn to the telecoms industry for this one.
If you have a phone contract with Verizon, US Cellular or any of the many providers out there then you probably have a contract that has you paying for calls at rates that dependent on the time of day or the day of the week/weekend. Some providers offer free calls on weekends, free calls after 6pm, and peak rates during the day etc. The rate and the time you spent yapping away with whomever is itemized on that bill you receive at the end of the month (or if you’re like us you now check your bill online and prevent save some trees). Should you have a problem with how much you’ve been charged for some of the phone calls you can customer service and get things rectified.
Now replace Verizon and US cellular with (let’s use non Illinois electricity companies) Duke Energy and PG & E. And replace call minutes with electricity usage minutes. Keep the time of day or weekend pricing and you have Real Time Pricing in the electricity industry. Expect to get more information on your electricity usage
Does this make it any easier to understand two of the features of the current electricity market? Let us know.
More to come in a few days
|© Daniel Steger (SuperContributor),|