Deregulation Means You Have a Choice of Electricity Providers
Since the early days of the 20th Century, the control of the electric industry rested with a large group of regional monopolies — companies that were the sole providers of electricity supply and delivery for the areas they served. Because of the importance of these services to the public, these utilities were heavily regulated by the government.
Since the mid-1990s, a number of states have passed legislation deregulating these electricity markets — allowing for competition in the industry. This means that customers in states that have undergone deregulation can now choose an alternative electricity provider (different from their utility) to seek competitive pricing and choose electricity products that make sense for their business.
There are three central components to electricity service:
- Supply — Generation of electricity has been deregulated. This means you have a choice about where to buy your electricity supply.
- Transmission — This is the transportation of the large electricity supply from its source (e.g., a power plant) to the receiving station of the utility. This is still regulated, ensuring reliable delivery.
- Local distribution — This is the transportation of electricity from the receiving station to your business. It is also still regulated.
Energy deregulation is very similar to the deregulated telephone industry, in which you may choose different companies for your long distance service, while your local phone company continues to maintain the lines you use. The transmission/distribution portion of your electric bill (the cost to get the power to you) is still provided by the utility, but you have the ability to shop for the best prices and service available to you in the market for supply, or generation.
To learn more about deregulation, please explore these resources for additional information.
