Energy Deregulation: The Best 3 Things You Should Know
Source: Photo by Natali _ Mis on Shutterstock
Did you know you have the power—and freedom—to choose your energy supplier? While the local utilities were used to hold the monopoly on the electricity markets, now different suppliers are available to compete in it. This opening up to competition is an opportunity for customers like you. You can now move towards cheaper offers, improve the quality of service offered to consumers, and thus increase savings on their energy bills.
1. What are the new actors?
These guidelines aim to build an “internal energy market” across the United States. This comprises allowing states to turn regional transmission systems into for-profit businesses from which customers may buy directly. When we discuss energy deregulation, we discover it allows customers to pick which supplier generates or sells the energy they get.
Energy deregulation has caused removing the responsibilities of one only player active in the energy market and redistributing them to others. Companies present at different levels have been ordered to separate their activities so as not to distort the game of the competition. This obligation has thus given rise to several types of actors. Today, legislation divided the whole electricity process into three really specific entities:
In a nutshell, these are the power plants. It’s the company that owns and runs the power plant. With energy deregulation, States allow them to sell the electricity to the wholesale energy market. Therefore, since they sell in bulk, you can get cheaper rates from your supplier.
Transmission and Distribution Utility Company (TDUs)
You are probably familiar with your local utility company. They are managing, maintaining, and improving high-voltage lines and high-pressure pipelines in cases of gas. They guarantee the transmission of energy from power plants and gas terminals to customers.
If you choose to switch to energy deregulation, you won’t have any change in the service, as your local utility will continue to supply the service to your home or business. They are regulated and should be contacted in the event of a power loss.
Retail Electric Providers (REPs)
What is their target? Resell energy generated or delivered into our territory to end-users before sending it to the transmission system operators’ network. They are in constant contact with end customers as they resell the energy that they bought from generators or that they produced themselves.
As part of their commercial activity, they offer several types of contracts, each with specific duration and prices for electricity. A rise in offerings because of deregulation, has freed suppliers to compete. With energy deregulation, you can choose between all the different suppliers in the market to get a better rate, contract term, and service.
2. What does energy deregulation of energy mean?
Energy deregulation allows markets to be opened up to the competition. It comprises putting an end to the monopoly situation that existed until then by separating activities such as distribution and supply of energy. Energy suppliers must be able to access the market by setting market prices to honor the contract they have concluded with their customers.
Let us explain how regulated markets work vs deregulated ones. In regulated markets, usually, a single utility company owns the transmission lines, they own the infrastructure with it, and the state’s Public Utilities Commission (PUC) regulates it and sets a standard for product availability and price.
Energy deregulation, on the other hand, doesn’t allow such monopolies to exist. The control is more varied since there are the transmission and distribution utility companies who own the infrastructure, and then generators, produce energy and sell it in bulk to Retail Electricity Providers (REPs), who then sell it to consumers.
With energy deregulation, you can choose among the different REPs in your location—you will have more options and they will have to compete to get you with competitive rates and loyalty packages.
Most of the time, these REPs purchase energy from the same power plan. What they do is that they customize packages to meet the demands and needs of the end customers. Be sure to compare properly to assure you’re making the right decision when choosing your energy supplier. One of the key differences you may find are contract terms and rates:
You decide. You can have the same per-kWh cost throughout your contract. No need to deal with different monthly rates and seasonality. Knowing exactly how much you pay per kWh will give you complete control over your monthly payment.
With fixed-rate plans, the rate will vary according to the length of your contract. Can be as little as 6 months to up to 48. Be sure you understand cancelation costs and the many hurdles to transferring providers this way—you won’t be surprised if you decide to make a move.
The kWh pricing for your plan may change due to peak seasons, seasonality, or day periods. These plans work every month, making it difficult to see or manage your monthly costs. On these, there are usually no contract terms.
3. What’s in it for you?
Energy deregulation doesn’t just allow you to have cheaper energy prices. Energy deregulation means you can get the same service with a better service and you may have access to new non-renewable sources of energy or even some green energy sources that you’ve never heard of.
Small actions add up to tremendous changes. If you choose a green energy supplier, you’re contributing to lower your carbon footprint and making conscious choices to help the planet.
This competition drives innovation, provides choices for customers, and helps keep energy costs as low as possible. If you live in states like Illinois, Massachusetts, Maine, New Hampshire, and Ohio, you’re entitled to choose your energy supplier. Andsince your utility will continue to distribute the energy, you will have a seamless transition during the whole switching process. You will have no service, product, or quality change!
If you haven’t chosen to transfer suppliers yet, you probably still get your electricity from your utility company. Are you’re interested in energy deregulation? You can start by going on our website and filling in your zip code and some basic information about your property. We will do the work for you by comparing all the different providers in your area and providing you with the one that better suits your needs. Go On, Be Powerful, choose to take control of your costs with PowerChoiceNow.