Energy policy, laws, and acts exist to regulate the electricity and natural gas sector. Because these utilities are so essential to our everyday survival, it is important that the government put certain controls in place to ensure a safe, affordable, and reliable supply of energy. In this article, we dive into some of the energy regulations affecting the market today and what they might mean to your business and your energy expenses.
The Goals Of Energy Policy In The U.S.
In addition to ensuring a safe and affordable supply of energy to consumers, as mentioned above, some of the other goals of energy regulation and laws include protecting the environment and placing certain restrictions in place to curtail price fixing and corruption. Let’s explore some of the more prominent energy policies over the last century as they pertain to their objectives.
Promote Lower Energy Prices
When looking at the history of energy deregulation, it is clear that the main objective of policy makers was to lower the cost of energy for consumers. After all, a more competitive market brings price competition and lower prices. The formation of FERC, Federal Energy Regulatory Commission, was a big step towards breaking up the utility monopolies. FERC oversees deregulated energy markets at a federal level while allowing states to set their own energy policies.
Increase Sustainability
There are many laws that have been passed over the last two decades promoting the use of green energy. These energy regulations were passed with the intention of protecting the environment and encouraging businesses and utilities alike to use renewable energy. Some more recent regulations promoting sustainability include Renewable Portfolio Standards that require utilities and retail electricity suppliers to purchase and/or generate a certain amount of electricity from renewable sources. The federal investment tax credit related to solar energy installations is another tax law designed to motivate consumers to invest in solar power.
Energy Reliability
One of the most important aspects of the wholesale electricity and natural gas deregulated market is to have a reliable supply of energy. As the electric grid is made up of several regional electric transmission operators, each organization has its own policy to ensure the safe delivery of electricity to homes and businesses. Electric suppliers on the PJM grid, for example, are required to post collateral in the form of currency to cover enough power supply for at least one month’s worth of customer usage. This requirement ensures that all customers will have enough electricity in the event that an electricity supplier goes bankrupt. The one month’s supply of cash pays for the power needed to keep those customers running before they return back to the utility for default electricity supply.
A List Of Energy Policies, Acts, and Regulations
There are many energy laws that have been enacted since the invention of electricity. Let’s explore some of the more prominent energy policies implemented at either the state or federal level.
Federal Power Commission (1920)
In 1920, the Senate confirmed the Federal Power Commission (FPC) to oversee the development of electricity generation in the United States. The FPC became the federal government’s overseeing body for the energy sector and it eventually became what is known as FERC today.
Public Utility Holding Company Act (1935)
This was a federal policy put in place in 1935 to regulate the ownership of utility companies. This act limited the size of electric utility companies and their holding companies and forced them to only operate in certain regions. The act also regulated the sale and transfer of stock in these organizations. The main goal of this act was to ensure that not one electric company gained too much power over the market.
Natural Gas Act (1938)
The Natural Gas Act of 1938 was the U.S. government’s first attempt to regulate the natural gas sector. This act placed all natural gas pipelines under federal jurisdiction and was an attempt to regulate transportation rates on the pipelines. The fear by the government was that the natural gas industry would consolidate and create monopolistic players that would fix the price of gas in their favor. This act placed the power in the hands of the FPC and later FERC>
Energy Policy and Conservation Act (1975)
The Energy Policy and Conservation Act of 1975 was a response by Congress to the oil crisis of 1973. This act created strategic oil reserves and was designed to increase energy production and supply by incentivizing producers. The act also gave the Executive branch of the federal government more power to act during an energy emergency or crisis.
Energy Policy Act (2005)
The Energy Policy of 2005 was signed into law by George W. Bush and was designed to incentivize energy production in the United States. Namely, this act is famous for creating the 30% federal tax credit for solar power installations that still exists today. This act also created many programs and incentives for the promotion of alternative fuels and the development of alternative vehicles such as natural gas powered trucks.
Infrastructure Investment and Jobs Act (2021)
This act passed by President Joe Biden in 2021 was designed to promote electric grid resilience, energy technology such as battery storage, and also provided tax breaks for nuclear power plant development. This act allowed $7.5 billion to build a nationwide network of electric vehicle chargers and $73 billion to improve the nation’s power infrastructure.
Energy Regulation Impact On Customers
If you are a commercial, industrial, or even residential customer located in a deregulated energy state, then energy regulations could have an impact on your energy costs and how you decide to do business. In addition to your local energy brokers required to hold an energy brokers license, there are other laws that you could take advantage of to save money. For example:
- Solar Investment Tax Credit: Receive a 30% tax credit on the total cost of a solar project installed at your home or business.
- Community Solar Regulation: Receive electricity bill credits for subscribing to a local solar farm.
- Consumer Protection: Use your state’s Public Utility Commission, or utilities board, to get involved in disputes pertaining to energy fraud or energy scams.
- Shop For Lower Cost Energy: Because of energy deregulation actions, you might have the opportunity to negotiate with energy suppliers for lower energy rates.
In conclusion, it is important to understand the changing laws and regulations related to energy so you can take advantage of opportunities for your business. You might also need to understand certain regulations that could have a negative impact on your operations. Hiring an energy broker or energy consultant to help you navigate the complex world of energy could be a great idea.
Need Help Navigating Energy Policies & Regulations?
Our team of energy professionals has decades of experience reading and comprehending energy laws and acts. In fact, because of our position in both the wholesale and retail energy markets, we have teams of people dedicated to staying up-to-date on the latest energy policies. Contact us today if you have a question or need a deeper understanding on a specific ruling and how it might affect your business. We are waiting for your call.
