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Electricity deregulation a policy that must be implemented carefully

The basic idea of electricity deregulation is to introduce competition in the energy market where possible and separate out the parts where competition is impractical.

The Vancouver Sun notes that when Alberta opened up its electricity market in 2000, many businesses were excited about the potential for the free market to lead to greater efficiencies and lower electricity rates.

But those savings on electricity bills have largely not appeared, with many businesses finding the fixed rates of alternative electricity providers no better than utilities options or simply accepting the variation of the spot market. However, these businesses have not come out against electricity deregulation as a concept, but rather the way it was implemented.

“We don’t have faith that the system is working, that it was built in a fashion that provided adequate oversight,” Mel Svendsen, president of Standen’s Limited, which builds suspension components for vehicles and agricultural tillage tool manufacturers, told the Sun.

The experience bears similarities to the experiences of California and Pennsylvania, where electricity deregulation was ineffectively implemented by attempting to limit prices and placing artificial restrictions on electricity provider. In California, this led to abandoning the policy, but Pennsylvania eventually lifted these caps and saw competition grow dramatically.