In this article, we will explore the history of deregulation, how deregulated energy markets function, the benefits of deregulated markets, and which states currently operate in deregulated markets. Energy deregulation gives consumers the opportunity to choose their energy supplier based on their individual energy needs. Deregulation is aimed at eliminating energy monopolies to increase competition which results in better services for consumers.
When energy first started to be delivered to consumers at a mass scale in the US, energy markets were deregulated. This allowed for open competition and typically low rates for customers. As competition in the energy industry increased, many utility companies aimed for increased efficiency and rapid expansion to deliver the best energy services. Though this deregulated system worked for a time, the scale of expansion led to poor management of the infrastructure and distribution in the industry.
With no real standard for how to distribute energy to customers, many of them were often under-served by the utility companies. With these complications that early energy deregulation caused, there was a push to better regulate the energy industry. These regions would be responsible for improving the infrastructure and efficiency of energy delivery within their own regions. NERC did end up improving energy delivery, but it was at the cost of energy monopolies rising to the top and increasing rates for consumers.
This created its own crisis that would need to be addressed. To combat the unreasonable price increases, the government created the Federal Energy Regulatory Commission FERC which would allow individual states to determine if they wanted to regulate or deregulate their energy markets. This opened up competition but with a much more standard approach to delivery and infrastructure this time around.
Today, utility companies still maintain ownership of energy infrastructure, but customers have the choice to decide which providers they work with. If you live in a state with a deregulated energy market, you have the option to get your energy from a Retail Electricity Provider REP or you can choose to use the state-appointed utility provider.
Though REPs and the state-appointed utility providers typically get their energy from the same source, REPs are able to sell and package the energy in a variety of different ways based on the customers they are serving.
Since there is much competition between REPs, they all strive to offer the best rates and loyalty programs. Once you have identified that you are in a deregulated area and can shop for electricity, there are a number of things to think about:. The local utility can not provide your electricity supply.
How Do I Shop for Electricity? Once you have identified that you are in a deregulated area and can shop for electricity, there are a number of things to think about: How much electricity do I use? Should I go short term or long term for my electricity contract? Is there a deposit to start my electricity service? Are there renewable energy options to go green without installing solar?
Central Maine Power Company Massachusetts National Grid New Hampshire New Hampshire Electric Cooperative Texas Connecticut is characterized by its low-energy-intensive economy , in terms of energy usage per dollar of state GDP.
Deregulation laws were adopted in , requiring two electric utilities and the Department of Public Utility Control DPUC to create a competitive market. Generation was separated from transmission and distribution by , and utility companies auctioned their power plants. Electric choice was implemented between January and July Delaware enacted deregulation laws in , and implementation started in March The state is characterized by having the lowest electricity production in the US , and its consumption is times higher than its production.
As a result, Delaware depends on power imports. Maine has the cheapest electricity of the New England states, and is also the wind power leader of the region, with over MW of capacity.
In , the Maine legislature published an act to deregulate the electric industry. However, the state has been actively working to reduce coal-fired generation, and the rest of its electricity comes mostly from renewables and nuclear power.
Legislation to deregulate the power sector was enacted in , and the process had been completed by This included the Energy Switch Massachusetts program. However, the state has also been investing in wind power , which surpassed coal generation in New Hampshire enacted deregulation laws in , and utility companies were restructured between and Texas started deregulating its electric sector in , a few years after the New England states discussed above.
However, over 26 million Texans can now choose their electricity provider. Read more about electricity deregulation in Texas. The following states have deregulated both of their energy services — electricity and gas. The following tables summarize their electricity and gas prices according to the US EIA, and the utilities with deregulated territories:. Southern Maryland Electric Coop. Rockland Electric New York Toledo Edison First Energy Pennsylvania West Penn Power Rhode Island Virginia The following table summarizes average gas prices for each state, and the utility companies with deregulated territories:.
Energy deregulation was enacted in , and implemented between and
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