How Deregulation is Empowering Electricity Customers

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More regions across the U.S. are beginning to make the switch to deregulated energy markets. But what does that mean exactly? We assessed some of the information found at for details on deregulation, and here is what we learned.

What is Deregulation?

Energy deregulation has been a common term in the electric industry for well over a decade, but the principles behind it aren’t well known among customers.

In areas that are regulated a single utility owns and operates the energy infrastructure. That utility is responsible for buying wholesale electricity from generators, storing it, distributing it to customers and managing accounts. With a sole entity in charge of the distribution customers don’t have a choice in how they receive power and there’s no variation in rates.

On the other side of the coin are deregulated areas. In a deregulated market the utility still controls the infrastructure for storing and transmitting wholesale electricity, however electric providers purchase the wholesale electricity to sell to the end consumer. The providers decide what rates to charge customers and manage the accounts.

Simply put, in deregulated markets consumers can choose who supplies their electricity, whereas in regulated areas only a single entity provides power. There are also a wide variety of rates and services offered because electric providers are competing for business.

Both gas and electricity services throughout the U.S. have been deregulated in the last few decades. California was the first state to deregulate electricity in 1996. Since then many other states have followed suit.

In 2010 the Energy Information Administration (EIA) reported that 23 states and the District of Columbia had partial or full electricity deregulation. There was also full or partial gas deregulation in 18 states and the District of Columbia. In the last five years five additional states have added some sort of energy deregulation. To date only 18 states have no deregulation at all.

Why Comparing Electricity Options is Beneficial for Customers

If you live in a deregulated area that means you have the power to choose your provider and plan. While this may take more effort than just sticking with your current service, it’s well worth the time invested. Here are three reasons why it pays to compare electricity plans.

It Encourages Competition Among Providers

The whole idea behind energy deregulation is that competition will lead to better service and better rates. It’s a trend that is finally beginning to take off in Texas now that more consumers are comparing options. At the end of 2015 the Electric Reliability Council of Texas (ERCOT) released reports that showed over 65% of Texas customers had switched electricity providers since deregulation went into effect. Officials stated that customers’ willingness to switch providers is one reason why rates have declined in the last few years in deregulated areas.

You Can Get a Lower Rate

Electricity rates continuously fluctuate. The only way to ensure that you’re going to get the best price per kilowatt-hour is to shop around and compare the current offers. Some of the newest plans offer variable rates that change throughout the day. If you’re mindful about your electricity use you can avoid the peak hours and cut your energy costs even further with these types of plans. Plus, they encourage people to use less energy when the electric grid is close to maximum capacity.

You Can Find Green Energy Plans

Today there are a lot of electricity plans on the market because providers are trying to differentiate themselves from the competition. One way many providers are attracting eco-conscious consumers is with green energy plans. With this type of plan electricity is partially generated through renewable resources like wind and solar. Recently, Dallas-based TXU Energy announced that they would be offering 100% solar and 100% wind energy plans.

These renewable energy plans aren’t just good for your conscious. They benefit everyone. From supporting innovative companies that are improving clean energy to reducing the strain on electric grids, when you go green with your electricity it’s a win-win. And the only way to do that is by comparing electricity plans.

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