If you aren’t happy with your electric company, you can switch — if you live in a deregulated energy market.
Currently, there are 18 US states with full or partial regions with deregulated energy choices such as gas, electric or both. If you live in one of these regions, you have the power to switch which company supplies your electricity and the price you pay for it.
What deregulation does for the consumer is ensure you can choose from multiple companies and benefit from competitive pricing, more innovative services and the freedom to make your selection based on specific needs, said Jake Edie, an adjunct professor who teaches a course at the University of Illinois Chicago on clean energy in the electric grid. For example, renewable energy options or customer service may be what’s important to you, and Edie says deregulation allows you to seek out your wants.
But just because you have the option to choose your electric supplier doesn’t always mean you should.
The choice to switch energy suppliers is a personal decision, Edie said. It could be for a better price or so you can source your power from clean renewable energy like solar, wind or hydro power.
Edie, who lives in a deregulated region of Illinois, switched suppliers so he could control where his electricity came from. Edie chose to change to a company that sources its power from clean solar energy.
Whatever your circumstances or motivations may be, gathering all the relevant information before switching energy suppliers is essential. Here’s everything you need to know about how to switch energy suppliers in deregulated markets.
What is energy deregulation?
Energy deregulation is when governments reduce or ease regulations over electricity and gas markets to allow multiple companies to compete for business and eliminate regional monopolies.
Edie says history shows that consumers paid higher electricity fees when a single utility company was responsible for generating, transmitting and distributing electricity in a specific area. Deregulation means consumers have a choice of who they buy their electricity from. Typically, deregulated markets tend to have more-competitive pricing and more consumer-friendly options.
As much as there are some advantages to deregulation, there are also some disadvantages. For example, multiple providers offering services can be complicated for customers to navigate. Some deregulated markets have also faced price manipulation issues, making understanding your bill confusing for consumers.
What’s the difference between my electricity supplier and my utility?
Electricity supplier
Simply put, an electricity supplier — or generating company — produces electricity through various methods. These methods use multiple fuels like coal or biomass to rotate steam turbines to generate electricity. Alternative technologies include gas, wind, and hydro turbines, which use kinetic energy to drive these generators. In nuclear power plants, atoms are split to spin turbines and create electricity. Some clean energy-generating companies also use renewable energy sources like solar energy to generate electricity.
Utility or TDU
An electricity distributor, most commonly known as your utility or TDU (transmission distribution utility), is a company that manages the network of power lines and transformers needed to deliver electricity from the transmission system to your home or business. This company issues your monthly electric bill and separately charges for supply (the actual electricity used) and delivery (the electricity transport to your home).
Your geographic location typically determines the distributor and isn’t subject to change. However, while your distributor remains the same in a deregulated market, you can switch your electricity supplier or generating company.
For more information on deregulated energy rates and companies:
Check out CNET partner site ChooseEnergy.com, which, like CNET, is owned by Red Ventures.
What energy supplier should I choose?
There’s no hard and fast rule when choosing a supplier. It depends on your needs and personal circumstances. You can support clean energy efforts or save on utility bills.
Is deregulation good or bad?
It depends. Consumers can benefit from the competitive pricing that arises as a result of having deregulated markets. However, deregulation may lead to price manipulation issues, defeating the goal of a free and competitive market.
