Deregulation FAQ’s
WHAT DOES REGULATION MEAN?
Before deregulation, you were forced to buy your electricity and natural gas from your local utilities that monopolized the power industry. Deregulation enables the energy market to open up to competition allowing individuals and companies to choose their Energy Service Companies (ESCOs) from a variety of energy companies. The competition leads to lower natural gas and electricity rates and increases the level of customer service you receive because energy companies are now competing for your business.
HOW DOES DEREGULATION OF ENERGY COMPANIES WORK?
Your energy service is broken into three distinctive parts:
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- Suppliers-the energy companies responsible for selling you, the customer, the energy product
- Transportation and Distribution Centers-the companies that are responsible for transporting the energy supply from its source to the receiving station of the utilities
- Local Distribution Center-the utility that delivers the electricity by wires and natural gas by pipes to your home or business
IS THERE A RISK INVOLVED IN SWITCHING ENERGY COMPANIES?
Because your local utility is still responsible for sending the electricity and natural gas to your home or business, you do not have to worry about service interruptions or disconnections. The transition of your electricity and natural gas is invisible to the consumer. The utility continues to maintain the lines and pipes, read your meter, gauge your energy usage, and quickly respond to emergencies and outages no matter what ESCO you decide to use as your energy company.
HOW DO I BENEFIT?
Customers are now able to go into the highly competitive market in order to find the lowest rates and best terms from the many alternative suppliers. In most cases, the rate will be lower than the utility’s rate. In addition, you will have the ability to obtain fixed rates for up to five years.
ARE THESE SUPPLIERS SAFE AND RELIABLE?
Most of these suppliers have been around since the onset of deregulation. After the banking crisis in late 2008, only the strongest survived.
WHAT HAPPENS IF MY SUPPLIER GOES OUT OF BUSINESS?
In the case of an alternative supplier going out of business, your power will not be interrupted. The local utility will continue to deliver your power and charge you their current rate. You will, however, have the ability to go back into the open market and obtain a rate from a current supplier.
WHO WILL DELIVER MY ENERGY?
Your current utility will continue to read the meter, deliver the energy, and be responsible for handling any outages or infrastructure issues.
WHO WILL BILL ME?
Depending on your state and utility, you will either receive 2 bills, one from the utility company and one from the supplier, or continue to receive one bill for both from your utility company.
WHY SHOULD I UTILIZE AN ENERGY CONSULTANT?
An independent energy consultant is able to contact many suppliers on your behalf in order to obtain the best rates and terms. The consultants work for the customer and are paid a commission from the suppliers. In addition, an energy consultant is an industry expert with knowledge of the current market and the historical trends needed to make an educated recommendation.
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