Energy deregulation rolled out in multiple US states starting in the 1990s. The remaining states are considering following this trend. Unfortunately, some business owners are not aware that their state gives them the option of choosing their own energy provider. Thus, many of these companies are paying far more for this utility than they need to. The process is similar to choosing a phone supplier.
A lot of businesses continue to operate today in ignorance of what energy deregulation is and what it means for them. Yet, with the power to choose their energy packages, free market principles are in play and lead to fair market prices. This reduces monopoly, especially as more states opt for energy deregulation.
The topic of energy deregulation is complicated, as can be seen from the vast literature about it. But, as a business owner, you don’t need to wade through tons of information. We have put together the basics, which covers what you need to know to make a sound decision for your company.
What Energy Deregulation Means in Basic Terminology
The bottom line of energy deregulation is that you, as a consumer, for your home or your business, are now entitled to choose an energy service directly through a Retail Electricity Provider (REP). REPs provide competitive packages. They use loyalty plans, promotions, and lower rates to attract customers. REPs get their energy from the original provider. However, they can offer packages tailored for different consumer needs, such as small and large commercial entities. This enables you, as the purchaser, to exercise control over the balance of costs versus benefits you receive.
The Choice to Change is Yours
You can still stay with the state’s appointed energy utility company, provided your state is deregulated. Unless you have consciously exercised your right to go through an REP, you are still using the state utility. You can change this at any time. This means that if you are in Texas, for example, you can search for a Houston electricity company for businesses, as long as you are in Houston.
Terms and Conditions
When you sign up with an REP for a new energy plan, you enter a contract. This is for an agreed term, such as six months, 12 months, or 24 months. The contract binds you to the stipulated duration of the agreement. This means that if you change REPs, you will still be liable for the monthly rental fee until the end of your contract. This applies if you move to another area where the REP does not operate.
The monthly bill you receive will be broken down into two charges. These are electric delivery supply and electric supply. They each account for half of the total bill. The REP should explain how the accounts will appear and that they will not look identical to the government utility bill during the sign-up process.
What Choices Deregulation Brings
Deregulation allows you to choose between the government’s utility and an REP in your area. You also have a choice of plans, such as how long the contract will be and whether you want fixed or flexible rates. Some REPs guarantee that they will only sell energy from fully renewable resources.
As a business owner, you now have sufficient information to start looking for an REP.
