Understanding Energy Deregulation and Your Power of Choice

Most of us understand the concept that in order for consumers to have fair prices and a choice in open markets, competition among suppliers is a necessary and good thing. However, when it comes to resources all of us need, like power and communications, some feel that government regulation and control are necessary to protect the public. Deregulation in the energy markets is the result of two acts of Congress: the Public Utilities Regulatory Policies Act (PURPA) of the 1970s, which created to infrastructure for independent energy production, and the Energy Policy Act of 1992, which opened the energy supply market to re-salers and wholesalers.

In an energy market that's regulated, one company controls the entire supply chain and pricing, leaving consumers no choice but to use that service provider or go without. In a deregulated market, the energy commission for each state or region is responsible for generating power and transmitting it to the grid, and private companies handle maintenance, transmissions and connections from the grid to the customer.

How It Works

Deregulation works by forcing companies to offer lower energy rates, progressive energy technologies and customer incentives to compete for business. Nine states have deregulated both natural gas and electricity:

California Texas Illinois Michigan Ohio Pennsylvania Maryland New York Rhode Island

The remaining states have deregulated either one source or the other, but soon all 50 states will have open energy markets.

Who Benefits?

Ultimately, everyone benefits from energy deregulation. The states no longer need to spend money on grid and infrastructure maintenance, private companies can put their profits into developing cleaner energy technology and the consumer can choose the provider and terms that suit their circumstances and budget. Deregulation also benefits your by converting your utility bill to a fixed - rather than a variable - expense, allowing you to better manage your money each month.

In state that have deregulated their energy provision, companies like DirectEnergyRates.net will allow you to compare the rates from different providers only line at the click of a mouse. You simply type in you zip code, and you'll receive a company by company listing of rates, services and terms for residential and business customers. This allows consumer to pick the services that will fit their needs, and let you know about things like which companies provide green energy technology.

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