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Direct Access: Suspended

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In 1996, California made history by becoming the first state to enact legislation to deregulate the retail  energy market. Retail deregulation, known as direct access, was popular and proved to benefit the state, energy providers and most importantly, customers. However, between 2000 and 2001, an unusually hot season, as well as wholesale market manipulation, would ravage the energy grid and put the very future of direct access at risk.

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First again – Suspension of Deregulation

After suffering brownouts, blackouts and volatile price increases, Californians were desperate for relief. In an effort to stabilize prices, measures had to be taken and the California Public Utilities Commission stepped in. The Commission would assign the Department of Water Resources to negotiate new, long-term contracts that would stabilize prices. In order to supply the Department with a stable customer base to recover its cost, the Utilities Commission suspended direct access for retail end-users in September 2001. After five years, California would become first in the nation again – this time for halting retail deregulation.

However, direct access was not entirely gone – a limited, “grandfathered” class of electricity customers continued to enjoy the freedom of a deregulated retail energy market, and Direct Energy Business was one of the few providers who continued to serve its California customers through this time. 

Direct access was on the ropes and the future of deregulation was up in the air. Luckily, through legislative help, a maturing energy market and the help of a movie-star turned governor, direct access would be back in a positive way. In our final installment we will discuss how direct access reemerged and evolved into the power house it is today. 

If you're interested in learning more about deregulation, download our complimentary eGuide: The Dollars and Sense of Deregulation

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Posted: July 22, 2015