NOW that most people are used to choosing their long-distance
telephone carriers, they can start thinking about what it would be
like to choose their power company.
There's a serious move afoot in the United States to unplug
electric utilities from the monopoly status they have held since
The idea is that customer choice would drive electricity rates
down. The same idea led to deregulation of airlines, the trucking
industry, and the phone companies.
Power companies in Massachusetts, for example, recently filed
bulky deregulation plans at the request of the state Department of
Public Utilities (DPU).
The process of public hearings and government-industry give and
take is not unique to the Bay State.
Prodded by moves toward electric power deregulation at the
federal level, states around the country are moving at various
speeds to reform the way power is delivered to homes.
"There's no doubt at all" that deregulation can give individuals
and businesses a price break on electricity, says Thomas May, chief
executive officer of Boston Edison Company, the region's biggest
But he then offers very a big "However, ...."
"This will involve a very complex change," Mr. May warns. "And
when you are dealing with a commodity, and electricity is a
commodity, you are dealing with a market mechanism. When markets
are out of balance, prices spike up dramatically." The trick will
be, he says, to move to a competitive market and maintain a pool of
power that is adequate, competitive, and steady.
If electric power is disrupted in any part of a large system,
experts say, it is subject to rapid, sometimes destructive flows,
unlike gas flowing in a pipeline, for example.
California is also moving on deregulation, and most states are
at least considering it. Experts in Massachusetts say their state
has moved further down the deregulation road than other states. The
state is expected to decide later this year on how to implement
As far back as 1978, federal law began to permit competition in
the power industry at the wholesale level. Utilities were told to
buy power from businesses that generated renewable power outside of
the monopolistic utility sector, and states had to implement the
The law was one of several at the time that were geared to help
the US recover from the oil-price shock of the early 1970s.
A small but influential private generating industry developed.
The Energy Policy Act of 1992 increased the number of suppliers
that could generate energy privately. …