Tuesday, November 27, 2012

Energy Deregulation Explained

If you live in one of the dozen or so states that has voted to deregulate the supply of electricity to its citizens, you probably pay more for your power than necessary. Energy deregulation means that you can choose who supplies electricity to you so power producers have to bid to earn your business. In states like mine (IL), the local utility was required by law to send out letters to all its customers informing them that they had the option to purchase power from alternate Retail Electric Suppliers (RES). What the utilities did not say in the letter was that choosing to select an alternate RES would probably save them 20-30% on their power bill.

Electricity generation is a huge and rather complicated business so you might not be aware that your local electric utility (who you pay each month) may not be the same company who actually generates the energy you are paying for. We don't have the choice in local utility companies but we do have the option to choose from different producers. In my case, ComEd is the local utility that delivers power but other companies supply electricity to me through ComEd. Opting for an alternate RES won't change anything about the quality of your electric power or the service receive--you just pay less for it.

States like TX, IL, OH, PA, NY, CT, MA, RI, NJ, DE, MD, and Washington D.C. are deregulated electricity markets 
I recently enrolled with an alternate RES through a local company. My wife and I live in a small condo so we use relatively little electricity (only 3,869 kWh last year). Most homes use significantly more energy than this, but I still save over $100 a year after signing up. Many businesses like restaurants or convenience stores use 250,000 kWh or more in a year so these companies see thousands of dollars in savings each year going with an alternate RES. I still receive a single bill from ComEd but the portion under Electricity Supply Services is now a single line item with my new kilowatt-hour (kWh) rate listed along with how much we used last month. I was told this is the same for corporate account holders too.

I encourage you to read up on energy deregulation and decide if choosing an alternate RES makes sense for you. Let me know if you have any questions about my experience.