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Direct Access: Expansion

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In 1996, California made history by becoming the first state to deregulate the retail energy market. Retail deregulation, known as direct access, was popular, but suffered many setbacks – including being suspended after a devastating heat wave and wholesale market manipulation

Not fully dormant, there were still pockets of consumers who were grandfathered in and continued to enjoy the freedom that a deregulated energy market created. While it seemed that the experiment of deregulation  had run its course, direct access was not dead yet. 

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Return and Expansion

Although the suspension of direct access was a setback for consumers, retail electricity markets would continue to evolve and mature in the years after the energy crisis. In 2002, California authorized Community Choice Aggregation which allowed cities, counties, or groups of cities and counties to choose to provide electricity to their constituents rather than receiving the electricity commodity from the investor owned utilities. Customer support for direct access also remained and California policymakers became more confident with time that direct access was not a contributing factor to the energy crisis. 

In 2009, Governor Schwarzenegger signed Senate Bill 695, which catalyzed a major switch in commercial and industrial load to direct access over a four year span – the highest in each utility territory since the suspension of direct access in 2001. By 2013, 25 million megawatt hours (Mwhs) – or about 20 percent of commercial and industrial usage in the utility territories – were on direct access. Customer interest in the renewed direct access grew and enrollment caps filled quickly causing long waiting lists.

Direct access weathered the storm and would continue to grow in California.

In a future installment examining retail deregulation in California, we will look ahead to direct access’s future and provide an update regarding efforts by lawmakers led by Senator Hertzberg with the introduction of Senate Bill 286 to expand access to more electricity customers. 

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Posted: July 29, 2015