Here’s some surprising news – you have the opportunity to save money on your energy bills by selecting a new energy provider. This is known as deregulation or energy choice, and more than 45 million American households now have the option to choose their electricity provider for better pricing. According to the US Energy Information Administration’s 2021 data analyzed by CNET, this is the current situation.
Recently, residents in Ohio experienced the impact of rising electricity prices, with some American Electric Power (AEP) customers encountering an increase of nearly 30%. CNET’s Mary-Elizabeth Combs reports that AEP customers who didn’t use much energy had their prices adjusted, while those who signed up for a fixed price with their chosen provider did not see an increase in their bill.
At present, 17 states, including the District of Columbia, have either full or partial electricity markets that allow consumers to choose their own electricity supplier, pricing plan, and rate.
In these markets, energy companies compete for your business. According to Chris Ercoli, the president and CEO of the Retail Energy Advancement League, a national organization that promotes energy efficiency, this competition is advantageous for consumers. He states that retailers in regulated markets strive to meet customers’ needs by providing tailored services and unique payment options.
How Can You Determine If You’re Eligible for Energy Choice?
To find out if you can choose your energy supplier, visit your state’s public utility commission (PUC) website. There, you can find information about energy choice in your state.
Where Can You Compare and Purchase Energy Service Providers in Your Area?
If you’re looking for reliable sources of energy selection information, Chris Ercoli recommends consulting each state’s government-run website. Alternatively, you can enter your zip code into an energy-choice marketplace, such as chooseenergy.com, to discover available electricity plans in your area. (Select Power, like CNET, is owned by Red Ventures.)
Selecting a Provider that Aligns with Your Requirements
In a deregulated environment, you have the power to choose your electricity provider without leaving your current employer. For example, In Pennsylvania, there are over 100 energy suppliers to choose from.
The primary benefit of selecting your own electricity supplier is the ability to control the cost of electricity. According to Chris Ercoli, when deciding, prioritize control, choice, and convenience.
Managing your usage is crucial, and certain retail companies offer features that provide notifications and alerts if your usage is abnormally high. If your current provider lacks these tools, Ercoli suggests finding a vendor that can help you manage your energy usage and monthly expenses effectively.
Ercoli also emphasizes that having multiple options increases the likelihood of finding a solution that caters to your specific needs. This is an advantage of regulated markets compared to markets where consumers have limited options.
Moreover, other vendors may offer flexible options, such as fixed monthly bills, which can simplify your energy management. However, it’s important to note that some industry experts warn that deregulated markets may be associated with confusing pricing, fraudulent marketing strategies, and unreliable actors.
Each method has its pros and cons, so take the time to make a decision that you feel comfortable with. You can also ask your neighbors who have switched energy providers about their experiences.
Difference Between Your Utility and Electricity Supplier
Your utility refers to the entity responsible for delivering electricity to your home. It comprises the lines, meters, and wires necessary for this purpose. In restricted areas, if you don’t select an energy provider, the utility will choose one for you.
On your electricity bill, you may notice two separate charges in regulated areas: shipping and handling costs, and the supply cost, which represents the actual electricity product.
It’s worth examining an electric bill from an AEP Ohio customer, as circulated by CNET editor Jon Reed. This bill reveals separate charges for AEP Energy (the supplier) and transmission and distribution charges from the utility (AEP). In regulated markets, these charges are typically combined and listed on a single bill.
In terms of power choice, the factor you can control is the supply portion or the amount of actual power. This can be lower in competitive environments. Additionally, deregulated markets offer the option to choose where your electricity comes from. While it may not always be the cheapest choice, many regulated markets provide renewable energy options where suppliers purchase electricity from green sources, such as wind, hydro, or solar power.
According to Ercoli, your utility is responsible for efficiently distributing electricity from point A to B and ensuring reliable service. On the other hand, your electricity supplier is the entity selling electricity as a commodity, while not being directly involved in the delivery process. Ercoli compares the utility to a delivery service, like FedEx, whereas the supplier is more like a retailer offering a product.
Unregulated Electricity Still Under Government Control
Although often referred to as “deregulation,” experts such as Ercoli prefer the term “restructuring.” Ercoli explains that the retail industry is still regulated, with public service commissions overseeing and licensing the utilities that function as providers. These commissions handle consumer complaints and can penalize violators, serving as a watchdog for bad actors in the electricity market.
While deregulation permits competition in a state or region, it doesn’t mean that the government is absent. Every state, regardless of its degree of deregulation, has government-run functions. In states with discretionary power, the public utility commission can be a valuable resource in addressing grievances with power companies or service providers or finding a reliable alternative.
Our Methodology
Our assessment indicates that approximately 45 million American households have the ability to select or switch energy providers. To arrive at this figure, we examined the EIA’s list of all US households using electricity in 2021. We filtered and summarized the areas with unregulated electricity, excluding states with regulated electricity reduction measures, such as Michigan and California. The states included in these statistics are New York, Pennsylvania, Illinois, Ohio, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, New Jersey, Delaware, the District of Columbia, Maryland, and Texas. It’s important to note that even in states classified as regulated, other aspects of the energy sector may still be under government control.
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