With the advent of electricity competition and advances in technology, electric utilities are set for a vast restructuring and consolidation, much like the dramatic changes that took place in the telecommunications industry at the end of the 20th century.
Remember the endless commercials and telephone calls from AT&T, MCI, and Sprint in the 90’s? Not too long ago your choice of long distance carriers was very limited. Contrast that to today where competition and advances in mobile technology have completely transformed how we buy and use telephones. It’s not a stretch to expect the same type of transformation in electricity shopping over the next couple of decades.
For almost a hundred years, many viewed competition in electricity generation as undesirable thanks to high start-up costs and economies of scale, where costs decline the more energy a plant produces. Competing electricity generators, under this theory, would be a waste of resources and drive up prices.
Today, technology has vastly reduced the barriers to entry. Companies are free not only to compete as generators of power, but procurers of power called aggregates or marketeers. And in some cases, large industrial customers are creating their own electricity.
A Proctor and Gamble plant in north east Pennsylvania recently announced that they will become fully self-sufficient on locally produced natural gas. Advances in drilling technology have made it profitable to tap vast natural gas reservoirs in shale rock throughout North America- lowering the cost of electricity generation. The Proctor and Gamble plant was the largest customer of the local electric utility.
In thirty years, there could be as many different electricity plans, thermostats or home temperature control systems and conservation services as we today have cell phones. Consumers should expect no slow down of innovative products, services and solicitations from new electricity market providers as the country continues to develop from the old regional monopoly model to a streamlined and robust electricity marketplace.
