In October, Forbes reported that deregulated energy markets finally delivered the low electricity prices promised by the bolstered competition of a crowded marketplace. But that's not the only place deregulation has spurred improvements.
The energy infrastructure in the United States remained largely unchanged for more than a century. Utilities supplied and delivered electricity, and were regulated by state public utility commissions. But in the early 1990s, many states called for change. More than a dozen states set laws into motion that would deregulate the energy industry and have rippling effects on the infrastructure across the nation. The two most noticeable changes since deregulation are the growth of renewable energy generation and the modernization of the power grid.
In 1978, the Federal Energy Regulatory Commission passed a law, the Public Utility Regulatory Policy Act, to help alleviate the nation's energy crisis. The legislation laid the framework for deregulation by encouraging the use of alternative energy resources as opposed to the energy generated by utility-owned coal power plants. But the development of renewable energy generation was slow.
By 1992, the commission passed broader laws that separated the utilities' responsibilities even more, allowing states to separate the supply, delivery and transmission of electricity. As deregulation spread with state laws, green energy really started to take off.
However, that's not to say that deregulated states are greener. There are examples of renewable energy in both states with deregulated energy markets and without. Texas, for example, is deregulated and happens to be the nation's largest producer of wind energy, generating more than 12,000 megawatts of renewable power, according to the American Wind Energy Association. On the other hand, Washington, a non-deregulated state, generates more renewable energy, when considering all forms of green generation, than any other state.
But it can be argued that deregulation has helped increase the production and sale of renewable energy in the United States. States that operate under deregulated energy markets allow retail suppliers to purchase renewable energy from all over the country and break that energy up into green energy plans for consumers. Once renewable energy is generated, it's purchased and placed on the power grid. Although a customer who purchases a green plan doesn't get to use the renewable energy directly, he or she pays to have the green energy placed on the grid — which can essentially offset the customer's carbon footprint.
The power grid was built before cellphones, the Internet and the large population that has grown in the United States. Bottom line, it wasn't made to handle the load placed on it today, causing decreased reliability and security issues. And it certainly wasn't equipped to connect to the renewable energy generation sources that are popping up all over the country.
The U.S. Department of Energy is currently working on developing what has become known as the smart grid, a computerized electricity infrastructure with the ability for two-way communication and easier connections to green energy resources. Also, some states have begun taking measures to improve on the energy infrastructure. Many believe these gird innovations can be attributed to deregulating the energy market, or modernizing the way energy is bought and sold.
A report by GridWise Alliance and the Smart Grid Policy Center shows that there is a definite relationship between grid improvements and states with electric choice. The study examined the top 15 states for smart grid modernization and found that 11 of them have full or at least partially deregulated energy markets. Additionally, the study concluded that areas with electric choice were more likely to deploy smart meter devices, which help drive investments for improvements on the overall power grid.