Original post in Medium
Why do you know more about your cell phone plan than you do about your energy bill? At first, you didn’t. Then one day, the FCC created a rule where phone providers were obliged to clearly explain their charges to you, to enable consumers to better pick a plan that fits their lifestyle and to avoid excessive charges. When the cell phone industry allowed you to switch plans and keep your number the same, they no longer had a monopoly and had to win customers with better plans and services. This switch allowed consumers to become informed and knowledgeable about their choices. This has yet to happen in the power industry.
To that point, you know about green energy but do you know how much of your usage is sourced from it.
You drive an Electric Vehicle( EV) which is technically great for the environment, but do you plug into power at home that comes from a coal-burning plant or other environmentally non-friendly power sources? Hard to know.
There is a sense that no one wants to ask the hard questions or know the answers. The energy version of the proverbial head in the sand.
Here is the wake-up call: energy can (and should) be much more understood and controlled than it is today. Energy affects us in so many different ways. It drives much of our daily life and yet, we spend more time deciding what coffee drink to get in your local coffee shop than we do on your power consumption. Think beyond just the electricity to run your home: what about the gas in your car? If you add up all the ways where energy comes into play in your life, the cost would be staggering. This uninformed energy consumer is caused by a system that has little to no upgrade since Edison created the lightbulb.
SO WHY DO YOU KNOW SO MUCH MORE ABOUT YOUR CELL PHONE USAGE?
First, let’s take a moment to analyze how the phone industry was regulated to bring more transparency to consumers.
- The idea of the FCC creation in 1934 was to reflect an open, fair process for implementing regulations on the telecommunications marketplace.
- The Communications Act of 1934 was created because of the monopolies of AT&T and other local telephone companies. This act was particularly important because of the high cost of equipment investment and the potential market power from these companies keeping prices high.
- As the equipment became cheaper and more readily available to consumers, the FCC relaxed the rules, and competition increased.
- Deregulation in telecommunications meant several companies were created to compete in each part of the market: infrastructure, network, equipment, etc. It wasn’t until the Telecommunications Act of 1996 however that stricter regulation was introduced to level the playing field for newer companies.
- In 2014, the FCC started to take action against companies that were doing “Phone Bill Cramming”. Cramming is basically unauthorized charges on the bill, disguised as monthly fees or bundled into services. Consumers became very aware of the excessive charges on their phone bill.
Conclusion: when more competitors enter the market, there is an increased need to show clear value. There is a consumer need to understand what exactly is on a bill and why one should, or should not be changed by a service provider. Especially when providers are advertising and competing for your business with only lower prices.
Another interesting aspect about the telecom industry is that once pricing could not get any lower, some smart providers started to focus on the reliability and quality of their services. Customers not only care about paying lower taxes and fees for services, but they often value excellent service and network coverage as well. We may see a rise in collective sentiment about energy consumption as a result of the recent outage events in Texas. People want low energy bills but they also want reliable services at all times and to know they are being treated fairly.
AND WHY DO YOU KNOW SO LITTLE ABOUT YOUR ENERGY USAGE?
In many ways, buying energy today is a black box. So let’s go back to understand how this all started.
- During the Great Depression in 1929, many energy companies collapsed, causing fewer companies to service most users by 1932.
- The Public Utilities Holding Company Act was born in 1935 to prevent unfair practices from becoming common practice due to low competition in the market. The Securities and Exchange Commission was created to regulate and approve all holding companies.
- In 1970, the energy crisis affected energy on a global scale when many countries including America, experienced a shortage in petroleum, raising prices from $3/barrel to $12/barrel.
- Energy conservation rules were put in place in 1974 but the price still remained high. So legislation was enacted throughout the decade to incentivize other forms of energy and reduce US dependence on foreign oil or fossil fuels.
- The National Energy Policy Act of 1992 created the outline for a competitive wholesale electricity generation market by establishing a new type of energy producer known as the Exempt Wholesale Generator (EWG). EWG’s did not have the same rules or regulations, making it simpler for them to enter the market.
- In 1996, order 888 was created. This order required utilities to make available “open access non-discriminatory transmission services.” With this important change, several states started deregulation.
- Although no single state is completely deregulated, Texas is the closest with 86% total deregulation. At this time, close to 2 dozen states are partially deregulated, some states have deregulated electricity, others natural gas — few with both.
The purpose of regulation is to oversee utilities, which are considered Natural Monopolies. The purpose of deregulation is to invite innovation and competition. So while we finally understand our cell phone bill and usage, we owe this understanding to increased competition, bad market practices, and finally some regulation. Deeply understanding your energy consumption is not there yet. For one, most states are still regulated and leave little to no choice for consumers in their energy needs. Secondly, where heavy deregulation did occur in places like Texas, we are just starting to see some negative impacts due to the heavy focus on low prices versus reliability of services and investment in infrastructure. So, much like in the telecoms industry, some adjustments in regulation are bound to occur soon.
Energy education is also something that is in its early stages, unlike cell phone coverage. Although we speak a lot about solar houses, sustainable companies, and electric cars like the future has arrived, we tend to forget that these are exceptions to a world mostly maintained on old technology. Electric Vehicles total less than 2% market share in the US, solar power is just a little over 3% of total US electrical generation, and products marketed as sustainable were only 18.8% of the total CPG market. That means that most of the time, we still consume energy as our grandparents did 100 years ago. We have a long way to go on getting educated about energy beyond the media “novelties”.
While events like the California wildfires and Texas freeze have caused a lot of pain and hardship, they’ve also helped to educate people and raise awareness of the problems with the power grid and underlying infrastructure. With the mainstream media looking to understand the root causes behind these recent disasters, more and more light is being shed on the energy industry overall. The combination of, a rise in conscious consumerism, a general concern over climate change, and environmental impacts has set the stage for a huge shift in how we understand, implement and utilize energy as we know it. This, we hope will help drive the changes we see coming in energy consumption to mimic the changes we already experienced in the cell phone world.