Choosing your Electricity & Natural Gas Supplier: How Energy Deregulation Affects You
Your local utility company used to be the only provider that could supply and deliver your energy. Now, 18 US states are open to competition because of a process called deregulation - which means you have the right to pick your own natural gas or electricity supplier. But what is energy deregulation and how does it affect you?
What is Energy Deregulation?
In the 1990s and 2000s, many US states began to open their electricity and natural gas markets to competition.
Traditionally in the United States, your local utility was your only choice for electricity or natural gas service. This was because infrastructure was so expensive to maintain that it made more sense to give supply rights to only select local companies. As a result, local utilities had a monopoly on energy sales to all of the households within its service area.
What's wrong with a monopoly on selling energy? Well, without competition between suppliers, prices can be expensive and service may not be as good. Because you have only one local utility in your area, you are stuck with whatever (service quality, price) they provide. With competition, your local utility is no longer your only choice of energy provider. As more new suppliers enter the market, each supplier has to give customers better prices and service to distinguish themselves.
Find Out MoreLearn more about the history of deregulation in the US
Alternate Energy Suppliers: You've got the power of choice!
For customers in deregulated states, you will have a number of suppliers to choose from, based on where you live. Your local utility will still provide some of your natural gas or electricity services (such as connecting/disconnecting service, and responding to outages or emergencies), and your new supplier will take care of the rest (customer service, billing, energy supply). Alternative suppliers may offer good deals, better customer service, and save you money on the price you pay for electricity per kilowatt-hour or natural gas per therm/cubic foot.
Did You Know?Many Americans don't even know that they have the right to choose their energy supplier. What's more, many are just plain confused about what happens after changing from your local utility to an alternate supplier. We're here to help you wrap your head around it - call us at 1 (832) 460-0322 for more information!
Who Takes Care of Which Services?
Before deregulation, your local utility was always in charge of delivering and supplying your electricity and natural gas. These are official terms which may show up on your bill.
Delivery covers all the costs of getting energy to your home, including building and maintaining infrastructure. Supply charges cover the cost of the actual energy you consume, and customer service fees.
Now that you have the choice to switch to another retail energy company, the service strucuture has changed. If you switch to an alternate supplier, your local utility will still take care of all delivery services. Your new supplier will cover supply costs. In order to see whether you can save with an alternate supplier, you will need to compare your utility's supply costs with alternate supply companies.
Read our recommendations for good fixed rate plans with alternate suppliers.
How Service Changes After Switching
To sign up with a supplier, you will need to provide them with your account number for your local utility company - this is because the supplier will need to coordinate with your local utility to provide service.
Your local utility will always be in charge of delivery no matter what - that means if you lose electricity or natural gas service, you will need to call your local utility. Because your local utility always delivers your energy, there will be no interruption of service after you switch to an alternate supplier. Natural gas and electricity service will be exactly the same after switching.
It may take a few billing cycles to start getting supply service from your new company. When supply switches over to your new company, you may receive two separate bills - one from each provider. Some suppliers coordinate so that you'll receive just one bill from your local utility with all charges included.
Your local utility will always be in charge of fixing power outages and other interruptions of service, even after you switch to a new supplier.
Will My Utility Mind if I Switch?
Some consumers are worried about whether their local utility will charge fees if they leave for an alternate supplier. Don't worry - if you live in a deregulated state, your utility must allow customers to switch to alternate suppliers for free, and they are required to provide all customers with the same quality of service. You may just be able to save in the process!