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What The New Energy Deregulation Means For You

By Edited Nov 13, 2013 0 0

      Recently, The Federal Regulatory Energy Commission has made it possible for individual states to pass energy deregulation laws. In states that have deregulated, the former utility monopolies have been restructured to allow competition in the energy supply market. The utility commissions of each state still regulate the former utility monopolies, who still distribute the  electricity, read meters, and maintain power lines. State participation in deregulation benefits consumers  because power suppliers compete for customers by providing improved service and lower prices. The new electricity retailers can provide fixed prices for electricity to their customers and manage the risk involved in purchasing electricity from spot markets or electricity pools. It also benefits the environment because energy suppliers now compete to offer the most environmentally friendly services, such as green energy plans.  Green energy is energy produced from renewable sources such as hydropower, wind, and solar sources. Green energy production emits less pollution into the environment. Another benefit of energy deregulation is the creation of jobs by the  new energy supply companies. In states that have restructured to allow retail electricity competition, energy supply companies now generate the electricity and supply it to the local utility companies, who distribute it.   The price of the delivery of electricity to homes and businesses is not open to competition.  These prices are still determined by state and federally approved tariffs.

      In states whose utility companies are still monopolies, ratepayers are locked into the power sources chosen by their monopoly utility company. Suppliers still have monopolies on rates, so there is no incentive for power providers to innovate or lower their prices. Retail markets in all states are regulated by state agencies such as the state Public Utility Commission or Public Service Commission. These commissions regulate the distribution utility companies' expenditures and rates of return in every state. In states not open to retail price competition, the monopolies may construct, own and operate power plants at the ratepayers' expense.  

     Even in states that participate in energy deregulation, not all areas are open to competition at all times.  Thirteen states plus Washington D.C. now allow access to retail electricity competition. Six states allow limited access. In four states, the restructuring law has been repealed or delayed.   In California, retail access has been suspended. The remaining twenty-six states are not considering restructuring at this time. A few of the biggest new energy supply companies include Ambit Energy,  North American Power, and Stream Energy. They may supply electricity to utility companies out of state. The utility companies who they supply to distribute it to customers in their service area.  









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