by Jennifer Taylor, June 2007

• Introduction
• Deregulation—An overview of the issue
• Deregulation—today’s concerns
• Deregulation and electric cooperatives
• North Carolina & Electric Utility Restructuring
• Download the full article as a

Deregulation is the process of governments removing or reducing restrictions on private industries, such as the electric industry, to encourage competition, higher productivity, more efficiency and lower prices. Beginning in the 1970s, deregulation of the transportation, telecommunications, and natural gas industries illustrated that deregulation was feasible. Thus, supporters of restructuring felt they could do the same with the electricity market.
As envisioned, retail restructuring would give customers a choice of power suppliers. If a company could offer power for less, or offer better or more innovative services than what customers were receiving from their local utility, they would have the ability to change providers and buy electricity from the alternative source. In particular, customers would be able to purchase power from renewable energy sources, to help promote development of “green power.” In any event, customers would still pay a monthly bill to their local utility to deliver the power over its system.

To establish competition, public utility commissions or legislatures in deregulated states capped electricity rates for a period of time (usually five to 12 years, including extensions). This way, regardless of the price of the power, costs to consumers taking service from their traditional supplier would not increase. The capped rates also helped set the local price for power that competitive suppliers needed to beat. So what happened?