Energy Market Deregulation Explained

Energy deregulation was introduced to eliminate monopolized energy markets where customers had no choice but to get their gas and electricity from one main utility. 

Essentially, deregulation laws made it possible for other companies to step in and become energy suppliers (these companies are often referred to as retail energy providers or REPs). This, in turn, has produced a competitive market in terms of energy supply and customers now have more choice over where (and how) to purchase electricity and natural gas.

To summarize, in a deregulated energy market, residents can purchase energy from someone other than just the local utility.

Just like how there is more than one airline, more than one phone service provider, and more than one cable company, there are multiple deregulated energy suppliers that compete for customers.

To help with deeper insight into what a deregulated energy market is, perhaps it’s a good idea to understand how a regulated market differs:

States that run regulated energy markets have regional utilities that own and operate the supply of all the gas and electricity in the relevant area. From the generators to the delivery of energy to your home, the utility has complete control. They even own the power lines that host and transport the energy – and so they are responsible for maintaining them. 

Deregulation laws differ from state to state. These laws can also vary between the regions of a deregulated state. In fact, not all regions within a deregulated state are deregulated. For example, in Texas (one of the first states to pass deregulation laws), 85% of the state is deregulated.

For some states, the energy market is still fully regulated, and deregulation laws do not apply. 

Since deregulation allows multiple retail energy providers to compete for your business, suppliers will work harder at aiming to please. This means that you can expect:

·      Better rates

·      More flexible payment options

·      A more efficient service delivery

·      Better customer service

·      Access to renewable energy sources

Deregulation is all about giving customers options so that they can choose between energy plans that are more suited to their needs and budgets. 

Deregulation is more than just about having the power to choose a new supplier, it gives you the means to choose what type of plan you prefer as well. For example, most retail energy providers offer options such as:

 

·      Fixed-rate plans (where your rate won’t fluctuate);

·      Variable-rate plans (where your rate fluctuates with the market);

·      Short term options (which are convenient for those who may want to switch plans often) and;

·      Long-term options (which work out to be more affordable).

Once you have compared energy plans, simply contact the applicable REP and they will handle your switch for you. It’s as easy as that.

Before you sign up to the first energy plan that sounds good, it’s important to compare energy deals first – just to make sure that you truly are getting the best bang for your buck. 

To find the best plans in your area, you can use our free online comparison tool. All you need to do is:

1.     Enter your zip code

2.     Select your current utility or REP from a list

3.     Detail your current supply (how much you pay per kilowatt-hour)

We’ll then list the tariff options and plans to choose from in your area – so that you can make a quick and easy comparison.