Am I really paying less with the deregulation of the energy markets?
Did you know?
Energy prices go up every year, but this is due to inflation. This means that it is not only the price of energy that increases each year. The price of any good for sale will increase due to inflation. In order to make a proper analysis of the energy prices increase, one must use inflation stabilized data.
The red curve shows the actual variation of electricity prices in comparison with previous years. It has actually stayed rather stable over the past 20 years.
What does this mean for deregulation?
So does this mean deregulation was good? The previous graph includes the whole of the US, regulated and deregulated states alike. But here is a graph averaging the electricity prices of the fully deregulated states: CT, DC, DE, IL, MA, MD, ME, MI, NH, NJ, NY, OH, OR, PA, RI and TX.
Prices go down during the deregulation
The actual application of the deregulation came progressively between 1998 and 2000 (utility by utility). It appears that the preparation of a deregulation brought the prices of electricity down. Even before the competitive suppliers appeared, prices were already coming down. This is nevertheless still an effect of the deregulation: the deregulation caused the utility companies to bring their prices down in anticipation of the coming competition.
Prices increase soon after
Starting in 2005, the retail prices of electricity started to increase again. Due to the previous drastic decrease in the electricity prices, prices had to come back to their original state so that the companies remained profitable. In 2009, this increase stopped, and now we find ourselves back on a decreasing slope. All in all, there have been variations, but as the energy markets deregulated, energy prices globally decreased, and remain today lower (taking inflation into account) than they were before the deregulation.