Energy Regulation

Energy Privatization

Utility companies generate power at their plants and purchase additional energy, if needed, from outside suppliers.

Utilities sell their plants to other companies or affiliates and focus on being power distributors. New energy suppliers are expected to make competing offers of electricity services.

Public utilities commissions set "just and reasonable" rates that utilities can charge consumers. Typically, prices for generation, transmission and distribution are combined in a single charge. Under privatization, these charges will be separated.

Ultimately, free market competition is supposed to determine rates and consumers may choose among rival suppliers. But price caps will remain in place protecting consumers who remain with current distributors during transition periods.

Distribution companies, such as Pepco, are regulated monopolies that also deliver power to customers.

Existing utility companies will continue serving customers who don’t choose to switch to new suppliers.