Deregulated energy gives you the power to choose an electric supplier that matches your lifestyle. But what does this really mean? Let’s go through the definition of Energy Deregulation and our most significant reasons to make the switch together!
What is Deregulated Energy?
The redefinition of current energy markets and its deregulation is the market restructuring that aims to avoid energy monopolies by raising competition. This process allows energy consumers to benefit from rates suitable to their needs and specialist products from several energy suppliers.
The US has had for decades energy monopolies that were regulated by the government. The monopolies covered certain regions and aimed for a secure and consistent supply of energy at a fair price to the public; regulators frequently controlled the cost of electricity to ensure the rates didn’t rise; however, this wasn’t always the case.
Lately, as there have been many changes in the US economy, we see a progressive deregulated energy market in which more and more suppliers are coming into play. As these new players appear, we see different sources of energy showing up. As a consequence of deregulated energy, we see less production of power that comes from fossil fuels, better rates for residential customers, and better customer service.
In deregulated energy markets, customers – like you – don’t have to buy energy to the same old monopolies. You can check out different competing companies that can be more efficient and have better rates for you. So now that you know what it is, let’s go through the key benefits and reasons to switch:
1. Reduction of pollution and greener environment.
As deregulated energy markets increase, we see new energy companies producing the electricity we consume daily. This deregulation stimulates the generation of new renewable electricity options and the constant growth of them. For instance, did you know that renewable electricity technologies are among the fastest-growing in the US?
Deregulated energy is excellent as the US is one of the countries with the highest energy consumption overall and per capita globally. The United States utilizes and creates various energy sources and kinds, classified as primary and secondary, renewable, non-renewable, and fossil fuels in general categories. Let’s take a look at the following chart of energy generators in the US, made by the EIA:
Fossil fuels (oil, gas, and coal) are the primary energy sources, nuclear power, and renewable energy sources. Electricity is a secondary source of energy created from direct sources of energy. So what’s great is that you can have access to more renewable options, which gives the environment an extra green push.
Deregulated energy is motivated primarily by the quest for more economic efficiency. The competitiveness of the electricity market creates substantial incentives for cost reduction and productivity growth. Low-cost facilities prosper in competitive marketplaces, whereas high-cost facilities either lower expenses or stop operations.
2. Savings on your energy bill
Did you ever pay a hefty bill for energy? The combination of fluctuating rates and increased use is probably the most responsible. This deregulated energy market offers different prices to providers, enabling users to choose the best deal for their budget.
The pricing, conditions, and contracts of each energy provider are different and come in various forms. Energy providers generally offer fixed rates, which enable clients to lock energy prices for six, 12, 18, or more months. During peak demand periods, users are safeguarded by fixed rates from fluctuations in energy prices. The competition helps consumers to achieve the most economical energy bills out there.
In deregulated energy states, before deregulation, average kWh prices were much higher than the average. That gave rise to the idea that deregulation would make electricity more expensive. However, based on research by Cornell University, where they analyzed the evolution of electricity prices over two decades. They found that all of the following factors influence kWh prices:
- Most of the deregulated energy states already had higher rates for energy than those still controlled. Costly rates were often a motivation rather than a result to pursue deregulation.
- The price volatility of natural gas, one of the primary sources of energy utilized to cover electricity network demand peakings, has primarily caused changes in electricity costs in recent years.
- Energy deregulation supports competitively lower kWh pricing while migrating from the regulated environment leads to high utility expenses. It takes time for power rates to be reduced because of this.
- Some countries have abundant hydropower supplies which supply cheap electricity.
- This is also true in states that supply inexpensive power yet have the most emissions from fossil fuel sources for several coal-fired power plants.
3. Better competition, better rates and better service.
Users benefit from a competitive advantage through the deregulated energy markets. These markets encourage suppliers to compete for new customers, and to attract new customers, suppliers must distinguish themselves with better prices and offers that they value. Electricity providers can lose customers quickly in unregulated markets, so their goal is to keep you by any means necessary.
Increased competition often leads to a much higher quality of service. Think of it this way: for example, if you had a choice between two energy providers, you would probably choose the one that offers the best service for the same other factors. As a result, the bar has been raised for these energy companies in terms of customer service, and the overall quality of service is expected to improve.
When making your energy choice, one of the most important decisions you must make is whether or not to change a plan other than the one you already have. The costs you incur through the end of the month can vary widely. Above all, depending on the use, you have electricity and rates. If you want to know what is best for you between fixed and variable rates, go ahead and read our blog about it.
You can have peace of mind knowing that your energy delivery wouldn’t be affected by your choice, as your local utility will remain the same. In case of a power outage, or any problem, it will be the one who will solve any issues you may have. Do you want to learn more? This extensive explanation from the US Office of Energy Efficiency & Renewable Energy can give you more light on what to evaluate when you choose your utility rate.
You can also check out our website, enter your zip code, and some basic information about your consumption. You will find out if there’s a rate that may benefit you more than your current one. At Power Choice Now, finding a new energy supplier is straightforward. As a client, you benefit from competitive energy markets. By this, we mean you may choose the energy supplier that best suits your needs.