Energy Deregulation and Switching Energy Suppliers

Energy deregulation in the mid-to-late 1990's ushered in a new age of competition in the U.S. Before then, your utility company provided all of your energy generation, transmission, and distribution. The frenzy over how power generation, transmission, and distribution were going to get sliced and diced became great speculation, and created some interesting investment opportunities, and flops. Lots of speculation eventually ended up mimicking what happened with Ma-Bell back in the 1980s. Result: a very lucrative and competitive energy brokerage industry.

Did you know for example, that you can buy power generated from coal, solar, wind, nuclear, hydro, geothermal and even tidal power from anywhere in the U.S.? They ship it to you over the transmission and distribution lines, and settle the costs with your utility company after you buy in.

Well, not exactly ship, but if you think of all the power as being stored in one pot that we all dip into, then you pay for the percentage of that power that was generated by your choice of fuel. That way if we all elect to buy more renewable power from green suppliers, then the demand would hopefully drive the cost down.

But sadly, even though your monthly utility bill includes notices and offers to encourage people to switch power suppliers and get better rates, very few homeowners actually take advantage of utility deregulation. Sad statement on our sense of complacency.

If you haven’t by now, seriously consider your free option to change energy suppliers. Alternative energy providers are unregulated and often able to offer prices that are lower than your utility company’s power rates.

Why has energy deregulation been good? Well, energy deregulation separated the business of generating power from the business of transmitting and distributing the power (what your utility company does). So, while you get to choose your energy supplier and mix of fuels, the delivery of the energy is still regulated and is the responsibility of the local utility company.

That means that your utility company will be the one to handle safety issues, power failures and any damage to the grid (the poles wires, transformers, pipelines, etc.). In other words, utility companies really do prefer their customers go out and shop for suppliers, it allows them to focus on their core business. In fact, many offer names of suppliers, and periodically send pamphlets or brochures explaining and encouraging the switch.

Granted, improving conservation and energy efficiency should always be the first two approaches to reduce utility costs and energy use, but switching to green and competitive energy providers is completely free, with no strings attached. Since more than half of every energy dollar goes to market supply costs, it may be to your benefit to switch to a supplier who can help reduce your overall energy bills, or offer a fixed price if your preference is price stability.

Also, bidding out your power supplier gives you the opportunity to support the development of clean, 100% renewable sources of energy like solar power, wind power, low-impact or small hydro power, and landfill gas power.

So, how can you have energy brokers and suppliers compete for your business and offer the best utility rate, with the right mix of power from renewable energy, etc? You can try energy supplier marketers such as BidUREnergy, a FREE online energy auction marketplace to help home or business owners reduce their electricity and natural gas bills. You will need to present some information about your electric and natural gas accounts to pre-approved energy supply companies who will bid for your energy account.

However, there are several other ways you can obtain energy supplier names. You can contact your utility company and request a list of energy suppliers that partner with your utility. You also can get information on the web by performing keyword searches for energy suppliers and contacting the ones that interest you. Or, you can contact power brokers that handle residential accounts.

If after switching, you don't go keeping your lights on 24/7 or running your dishwasher on empty 3 times a day, you may actually see a reduction of 5-30% per year. This would usually translate to a few to a couple of hundred dollars per year. While switching suppliers should not over-rule performing home energy upgrades to reduce utility costs and energy use, the switch is FREE, and any savings can help pay for efficiency improvements or perhaps other necessities. And in the end, the money would probably be better in your pocket than the utility company's ;-) .

A few words of caution about shopping for a new supplier, or anything else for that matter:

  • Look for suppliers that focus on offering competitive residential rates – residential transactions are small ticket items for an energy broker, and probably not where most of his/her focus will be dedicated to,
  • Sometimes, better rates are negotiated when there is a large pool of homeowners that can wield a decent buying power, and,
  • Always read the fine print.

So, all in all, energy deregulation continues to provide opportunities that are market driven, which means that like voting, you may only affect it if you make a choice.

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