Introduction to Electric Industry Deregulation
When the telephone and gas industries were deregulated, they were broken up into local versus long distance, and supply versus distribution. A similar process of restructuring was attempted in the late 1990s in the electric utility industry with some dismal responses. The idea was that the electric industry would be carved into three major areas: generation, long-distance transmission, and local distribution. Generation, whether from a faraway hydroelectric power plant or a nearby natural gas-driven turbine, is the process whereby electric power is produced. Transmission lines provide the energy "super-highway" that delivers this power in bulk to communities like Burbank. The power lines and service drops in your neighborhood are part of the local distribution system that delivers this power to individual homes and businesses.
Under restructuring, generation was to have become a competitive market. The attempt was for customers to be able to buy their power (whether directly or through brokers) from other than their local utility. This was referred to as "Direct Access." Transmission would become regulated by an independent agency, the Independent System Operator, in order to assure that California's transmission grid was not operated in a way that could thwart competition among power suppliers. The local distribution system was to remain a monopoly of the local utility (so you do not have to worry about having dozens of wires and added power poles in your neighborhood).
California's Assembly Bill 1890 was passed in August 1996 and took effect January 1, 1998. The State Legislature, through enactment of Assembly Bill 1890, required investor-owned electric utilities in California, such as Southern California Edison, to offer Direct Access to their customers effective April 1, 1998. The decision of whether to offer Direct Access to customers of municipally-owned electric utilities, such as Burbank, was reserved for City Councils or other governing bodies.
Burbank's City Council took the time to become knowledgeable and familiar with the issues regarding Direct Access and decided against it.
While the deregulation efforts of the 1990s proved to be a failure, the goals of deregulation still exist. The desirable effects of deregulation are to create greater cost efficiencies and to have electricity rates more nearly reflect the true cost of service. BWP is striving to attain both these goals even in the absence of deregulation.
Deregulation terms you need to know
