THE DEFINITIVE DISSECTION OF ENERGY DEREGULATION
Our main objective at North American Energy Advisory is to help educate consumers on the benefits of energy deregulation in their state. The fact that only about half of all eligible customers have taken advantage of their energy choice program is an indicator that there is an overall lack of knowledge on how deregulation works. At NAEA, our motto is “Knowledge is Power” and we believe that having more knowledge of the rules of your state’s energy choice program, including all the options available to energy consumers, will make participating in an energy choice program a painless and beneficial process. NAEA’s Energy Advisors have helped millions of customers reduce their energy costs, and increased their budget certainty.
In this article we will describe exactly what “energy deregulation,” is, and how the various energy choice programs can benefit the consumers who participate.
What Is Energy Deregulation?
Energy deregulation laws were enacted to break up the monopoly on electricity and natural gas long held by utility companies. Prior to the implementation of deregulation, local utilities could:
- Own the generation plants that produce energy.
- Own the transmission and distribution infrastructure that is utilized to deliver the electricity to consumers.
- Charge rates to their customers based on randomly changing market prices and be guaranteed to make a consistent profit every year.
Even if your local utility didn’t own the generation plants that produce the energy, the utility shopped for energy supply from generators and then resold the energy to their customers at a profit, no matter how much the generators charged.
Deregulation essentially separates these three stages of the electricity market:
- (The production of the energy you use.)
- (The means to move the energy from the generation plant on to the electric grid. The BIG wires.)
- (The process of getting the energy to the end user. The small wires that connect to your home and business.)
In states that are deregulated, utilities have been forced to sell off their generation plants and now are only eligible to profit from the distribution and transmission of the energy. Having one company (Your Utility) handle the wires, billing, emergencies and maintenance is still the most efficient way to deliver safe and reliable energy to your home and business. Your local utility focuses on these aspects of your energy delivery and they still consistently profit from all the services they continue to deliver.
Now understand, even with deregulation, consumers do not have a choice of who their utility company is. You must still pay the transmission and distribution charges to your utility and you still receive the same customer service and emergency response that you have always had. However, deregulation opened the floodgates for retail energy providers. These are companies who buy wholesale energy from generators and sell this energy to the utility’s customers.
Energy consumers are now able to shop for better prices for their supply of natural gas or electricity from retail energy providers. Retail energy suppliers work with your utility to provide the actual electricity or natural gas supply, which means your emergency service and delivery is unchanged. In other words, the quality and reliability of your electricity and/or natural gas service remains unchanged, since the wires and pipelines are still the responsibility of your utility.
If consumers do not take advantage of the energy choice program offered by their state and shop around for the best energy supplier, they will continue to receive their natural gas or electricity supply from their utility at the standard utility rates, and they may be missing out on substantial savings.
How It All Started
(Image Courtesy of Starion Energy)
Deregulation resulted from a restructuring of federal policies intended to ease restrictions on the local electricity markets and promote the advent of new technology, products and services for the consumers. This started with the Energy Policy Act of 1992, which resulted in a pair of orders handed down by the Federal Energy Regulatory Commission that encouraged states to make their own policies regarding the deregulation of their incumbent utilities. This resulted in roughly half of the United States taking steps towards restructuring their energy policies. This process has had a profound effect on breaking up the utility monopoly system, which in turn, resulted in increased effectiveness of energy supply and energy related products and services, including opening the door for the availability of more and more “green” power choices.
Pennsylvania and Texas are currently the biggest success stories of deregulation, mainly because of their growing energy industries. Deregulation has opened up competition for small to medium-sized companies to compete in markets where consumers have a choice on how they buy the electricity they consume. Pennsylvania’s success has been shown by a very measurable reduction of electricity prices through open competition.
Additional deregulated energy markets include Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Oregon, Rhode Island, and Washington, D.C.
Why Deregulation Is Important
There has been an ongoing debate about whether energy deregulation has truly benefited each deregulated state’s electricity market. Those that are in favor feel that competition has helped to drive down prices. Critics argue that supply rates have not gone down and believe they have actually increased in some areas. However, these opinions do not take into account the large number of customers who have yet to take advantage of energy choice programs available to them. Those customers are still, on average, paying higher prices to their utility for their energy supply. The utility cannot profit from supply and has no incentive to shop for the best available rates. As more customers switch to a retail energy supplier, average energy prices continue to be more beneficial due to having retail energy suppliers compete against each other for the consumer’s energy business. Consumers now actually have the upper hand, as they can now negotiate with different retail energy providers to see which one can offer a better rate, or an energy strategy pricing strategy that is better suited to how they consume energy.
But What If I Don’t Want To Change From My Utility?
Utility companies cannot, and will not discriminate against you if you start buying electricity or natural gas from a retail energy supplier since they are not able to profit off the sale of electricity. This program does not take any money out of your utilities pocket.
When choosing a retail energy provider, the only difference customers see is the actual price per unit you are paying for your electricity or natural gas supply. One of the biggest concerns of both businesses and homeowners is that by switching to an retail energy provider, they will have to worry about disruptions in service. This concern, although understandable, is unfounded. The customer’s electricity and natural gas supply will continue to be delivered to them by their local utility company and their service will not be interrupted at any time during the process of putting an energy supplier in place.
Energy deregulation has federal oversight and regulations administered by the Department of Energy and the Federal Energy Regulatory Commission (“FERC”). In each deregulated state, the Public Utility Commission oversees the program to ensure fair business practices and protection for consumers. Under the deregulated electricity rules, the utility remains under mandate to continue to push the electricity to your building, and to repair the wires, poles and meters if they fail or malfunction. Consumers are still paying their utility for this service in the delivery section of their utility bills.
Just to be clear, if at any time you lose power because a storm causes a tree to knock down a wire outside your home or business, you still call your utility company. They will respond at the same speed and efficiency as they always have.
Making the Process Easy
It is not complicated to switch to a retail natural gas or electricity provider. In fact, the hardest part is identifying which retail energy supplier will be best suited for what you need, and what price they will charge you for your strategy. With so many different retail energy supply companies registered in your state, it can be difficult to identify which one is best for you.
Fortunately, consumers do not have to do this alone. The Senior Energy Advisors at North American Energy Advisory, have acted as consumer advocates for more than 17 years to help educate customers on their energy choice program, and they help tailor an energy strategy that is right for you. All you need is a recent electricity bill and a few minutes to answer some questions about your energy usage patterns, and we can put together a comprehensive plan that will help you find the best available electricity or natural gas supply price for your business or home. We work with only the best retail energy suppliers and we get them to compete for the right to provide your energy supply. We leverage our long-term relationships with these top energy providers to drive down the price and give you the choice between the best supply options. We present our findings to you, along with energy market data that shows the merits of our recommendations. With all the data compiled in one place, you can then make an educated decision on which direction you want to go.
Once you make your choice, we help monitor the process to ensure you get the price you agreed to. We act as your consumer advocate for any questions may have. The retail energy provider will work with your current utility to confirm the change in your pricing status. From there, your utility will incorporate your chosen natural gas or electricity rate on the monthly bill you receive.
There is No Cost or Obligation to See What is Available
Receiving a free energy cost analysis from one of our advisors is hassle free and comes with no obligation. If we are able to find an option that you would like to take advantage of, we help you secure it with the retail energy provider, who compensates us for placing a customer with them. If you do not find something you like, you walk away with at least a better understanding of the program, and what different options exist in your market.
Education is The Key to Success
Not understanding the process of deregulation, or knowing how to shop around for electricity or natural gas supply at a discount, is the number one reason that only half the customers in deregulated areas are participating in energy choice programs. While some consumers worry that they’ll end up paying more by changing, others are confused about what will change with their utility service. Most simply don’t think they have the time or the knowledge to shop around and make an intelligent decision on what to do.
Let Us Help You Create Your Energy Strategy
With almost 20 years of experience in helping customers balance their desire for short term savings, with their need to manage long term risk, our senior energy advisors can assist you to make an educated decision and find the best option for your home or your business.
To get started, you can call one of our senior energy advisors at:
SVP Customer Relations
North American Energy Advisory
This articles was originally posted at: http://naea.today/breaking-up-the-monopoly/ on