What does deregulation of the energy industry mean?

Deregulation also known as unbundling, means breaking the traditional bundle of utility services into its separate components: supply or commodity (in gas) and generation (in electric), transmission, and local distribution.

What results should one expect from deregulation?

One would expect the creation of new businesses that hopefully will provide the unbundled services more efficiently and cost effectively. Customers will have choice and will therefore be able to select whom they want to provide the unbundled service/s.

As a customer, how much choice do I currently have?

Currently, your choice as a customer is limited to supply/commodity (in gas) and generation (in electric) component The local Distribution Company still enjoys the monopoly of distribution.

What is the economic implication of unbundling utility services?

The economic goal of unbundling utility service is to change that sets the price of either electricity or natural gas. No longer will a regulatory agency or a monopoly determine price based on some arbitrary criteria or cost of production. The market place will set the price based on supply and demand. It is believed that competition will cause prices to fall.

What does retail access mean?

Retail access means an ability to buy electricity or natural gas from many sources, as opposed to only one source - the local distribution company.

What opportunities are there for me as a utility customer/consumer?

As a customer and a consumer, you are no longer tied to one supplier. If you don't like your present energy supplier, either for high cost or any other reason, you can switch to another. Customers can also join together in buying pools or groups to lower costs even further.

What opportunities are there for utilities in deregulation?

Utilities have a unique opportunity to provide other services like electric, gas and telephone services all in one bill. Also because of competition, they are also being forced to get rid of the inefficiencies in their business.

What are the challenges of deregulation?

The challenges are many. In a deregulated world, pricing and services will become more complicated. Knowing the terminology, suppliers programs, and legal risks are vital to take full advantage of these new opportunities. Contracts will need careful review and customers will have to monitor legislation and regulations. Utilities, new power suppliers, customer groups, unions and other interest groups will lobby to protect their interests. Other challenges are related to how utilities will recover stranded costs, which could make a big difference in everyone's electric, or gas bill. Deregulation will bring into play a whole new cast of players so background checks of suppliers are necessary. Also the volatility of the futures market can minimize or exaggerate price risks.

What is the status of gas deregulation in the United States of America?

For nearly two decades, the natural gas industry has seen significant restructuring and reform. Legislation was developed in the 1970's and consumers began reaping savings in the 1980's. In 1985, the Federal Energy Regulatory Commission (FERC) issued order 436, which encouraged natural gas suppliers to participate in voluntary "open access", programs. In 1992, FERC issued order 636 requiring natural gas pipeline companies to "unbundle" their product offerings. This order stopped suppliers from packaging transportation, storage and distribution into a single "bundle," During 1998 and 1999, a significant number of programs were proposed by local gas distribution companies (LDCs) enabling residential and small commercial customers the opportunity to choose their natural gas supplier. Currently, 24 states in the United States have either passed major legislative initiatives or are considering unbundling orders. All sates in the union have some form of retail access for large industrial customers and 25 stat es have retail access/pilot programs for residential, small commercial customers. Only Hawaii has no activity at all.

What is the state of electric deregulation in the United States?

Under deregulation, customers will be able to choose between several competing electricity suppliers. States, which have not yet enacted plans for deregulation, are expected to see considerable legislative activity in the near future. 11 states have retail access legislation implemented. 26 states including Hawaii have ongoing regulatory or legislative activity and 12 states have had retail access legislation passed with Public Utility Commission approval.

What is distributed generation?

Distributed power generation is any small-scale power generation technology that provides electric power at a site closer to customers than central generating stations. A distributed power unit can be connected directly to the consumer or to utility's transmission or distribution system.

What type of technologies are available for distributed generation?

Various technologies including turbine generators, internal combustion engines/generators, micro-turbines, photo-voltaics/solar panels, wind turbines, and fuel cells are currently available for distributed generation.

What are the benefits of distributed generation?

Distributed power benefits both consumers and utilities. Utilities can save money on transmission and distribution. There are also some environmental benefits from renewable technologies. These and benefits and reduced are passed on to customers in form of reduced costs.

What is a fuel cell?

A fuel cell is a device that produces electricity by combining hydrogen gas and oxygen.

What are the by-products of a fuel cell?

Fuel cells combine hydrogen gas and oxygen to produce electricity and water. Typically, natural gas is used as the fuel source.

What are the advantages of fuel cells?

Over reciprocating systems, fuel cells have higher electrical conversion efficiencies, quieter operation and lower emissions (typically 1% of the emissions produced by reciprocating systems).

What is the origin of fuel cells?

Fuel cells were originally developed by NASA for the US space program and the technology has been adopted for use in electric cars and in building co-generation systems.

What are the disadvantages of fuel cells?

Cost is the only disadvantage. They are more expensive and therefore fewer suppliers. They cost approximately three times more than a reciprocating system.

What is co-generation?

Co-generation is the simultaneous production of electricity and heat in form of steam or hot water.

What is the primary use of co-generation?

Co-generation is primarily employed to reduce energy costs.

What are the limitations of co-generation?

As with many physical plants, co-generation systems have a limited life cycle, and must be maintained, repaired, rebuilt or replaced as needed.

What does HVAC stand for?

HVAC stand for Heating, Ventilating and Air Conditioning.

What purpose does an HVAC system serve?

The main purpose of an HVAC system is to provide people working inside buildings with "conditioned" air so that they will have a safe and comfortable work environment.

What is "conditioned" air?

"Conditioned" air is air that is clean and odor free. The temperature, humidity, and movement of the air are within certain specified comfort ranges.

What does OPEC stand for?

OPEC stands for Organization of Petroleum Exporting Countries.

How did OPEC come about?

The organization, formed in 1960, to gain control over member countries internal oil reserve and ultimately their economy. It acts as a forum for discussion and agreement on the level at which the member countries should influence the price of their crude petroleum products through the assignment of production quotas to member countries. Five major oil exporting countries (Iraq, Iran, Saudi Arabia, Venezuela, and Kuwait) formed OPEC at a meeting in a Baghdad conference of September 10-14, 1960. These five founding members were later joined by eight other members: Qatar (1961); Indonesia (1962); Socialist Peoples Libyan Arab Jamahiriya (1962); United Arab Emirates (1967); Algeria (1969); Nigeria (1971); Ecuador (1973-1992) and Gabon (1975-1994). OPEC transferred its headquarters from Geneva, Switzerland, to Vienna, Austria, on 1 September 1965, and moved into the present Secretariat building in 1977. Ecuador and Gabon had their memberships suspended at their own request at dates underlined.

How much of the World's total crude oil production does OPEC account for?

OPEC member countries accounted for 60% of total world crude oil production and about 90% of total world exports in the 1970s. Their share of world export dropped to about 40% in 1990 as a result of high prices, which led to the development of alternative fuel sources, conservation, and the expansion of supplies from non-OPEC countries.

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What is an Energy Audit?

An energy audit is an exercise which serves the purpose of identifying energy usage pattern within a structure, plant, process, or equipment that consumes energy with the aim of identifying opportunities for conservation.

What is involved in an energy audit?

Any type of energy audit would include three fundamental components: data acquisition, data analysis, and recommendations.

What is data acquisition?

Data acquisition is identifying where and how a structure, process, or equipment uses energy along with the costs and other utility issues that may influence energy consumption.

What is data analysis?

Data analysis is the process of identifying energy conservation measures, which if implemented, will make the energy usage more efficient, less expensive, and/or more environmentally friendly.

What is expected under recommendations?

Under recommendations, a final report detailing what was found, areas of improvement, and recommended actions usually accompanied with some economic justification of such actions.

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