When basic energy services are regulated, you don’t have a choice when it comes to selecting your service provider. You have to pay the bills when they come in, and you have to deal with increases in rates even if they are far beyond what you can afford.
Whether you are concerned for your business or home, a regulated energy system never works out in your favor. Service providers control the cost of energy generation and distribution, and they are in charge of the rates billed to commercial and residential customers.
Now that many states are deregulating both their electric and natural gas markets, commercial and residential customers are realizing the many benefits of competition. A deregulated market forces service providers to compete with one another for customers. Once they secure a customer, they still have to compete for customer loyalty.
A competitive market will work out in your favor as long as you understand the following:
You will get the best rates when you know how the industry works and understand how to negotiate for the best rates with different service providers until you receive a rate that you can afford and contract terms that are to your benefit. If you don’t understand market trends or have the time to do the thorough analysis and negotiating that this requires, an energy consultancy becomes a valuable partner.
Many consumers pay regulated energy rates for years, assuming that those rates reflect the cost of producing and distributing energy to their businesses and homes. Now that many states have deregulated the industry and customers are receiving much lower rates, you may wonder how local electricity suppliers can afford to charge less today for basic energy services than they did in previous years when services were regulated.
The truth is that you mostly pay for the expense of generating electricity or purchasing natural gas. This includes the maintenance and operation of the power plant supplying your energy. The company offering your service is in direct control of the generation expenses, and they will do whatever it takes to lower those expenses and become more efficient when they have to compete with other suppliers for your business.
In a regulated market, suppliers have little motivation to create more efficient power plants or switch to more efficient operation practices. Once the market is deregulated and customers have the choice of going with another company offering better contracts and lower rates, companies are improving their power plants in order to lower the cost of electricity generation. This is a good thing for everyone involved, and it directly benefits you as the customer paying those bills.
If you live in a state with a deregulated energy market, it is your opportunity to learn about all of the companies offering services to your business and residential neighborhood. Your current provider won’t tell you if their competitors are offering better rates, and they hope that you don’t start negotiating with those competitors to find a better deal.
Yet, it is your opportunity to learn about your options and negotiate the best rate. That is the point of deregulation: to give you the right to choose and help you reduce your overall energy expenses. If you aren’t sure where to start, allow our energy consultants to assist you in negotiating your local market.