Deregulated Electricity vs. Regulated ElectricityJune 29th, 2015
In 1996, California became the first state to deregulate its electric market. Since then, 22 states and Washington, DC have followed suit. According to the U.S. Energy Information Administration (EIA), seven states are currently restructuring the laws governing electricity deregulation, including California. Both residential electricity and commercial electricity are deregulated in many Mid-Atlantic States, as well as others along the East Coast—but homeowners, business owners, and managers are often unaware about electricity deregulation, what it means, and how it applies to them.
Below, we compare a deregulated electricity market versus a regulated market.
What Is Electricity Deregulation?
Before deregulation, the nation’s electric market was controlled by the government and local utility companies. Business owners and residents across the nation could only receive electricity and other energy (e.g. natural gas) from their local utility company and were forced to pay whatever price the utility company offered for their electricity.
In a deregulated electric market, homeowners and business owners have the ability to choose their electricity supplier, allowing for greater price flexibility, increased competition between electric providers, and lower prices for electricity.
Think of it like this: If the mobile phone industry were regulated, everyone in your state would be forced to purchase a cell phone and plan from one carrier, Verizon, for example. But, if the mobile phone industry were deregulated, customers now have the option to choose a carrier—Verizon, AT&T, Sprint, T-Mobile, etc.
However, unlike the mobile phone industry, the energy you receive in a deregulated market is just as reliable as energy received in a regulated market—unlike the various service you may receive from different cell phone carriers.
Regulated Electric Market
How do utility companies operate in a regulated electric market? Vertically-integrated utilities own and control the entire flow of electricity—from generation all the way to your meter. In this model, customers are forced to pay a set price established by the utility company—no other options.
Deregulated Electric Market
Utility companies operating in a deregulated electric market are still able to set their own prices, but must purchase electricity during its generation stage before selling to end-users. However, the main difference between regulated and deregulated electricity is found at the most micro level—the customers.
Deregulated Electricity vs. Regulated – Which Is Better?
From a consumer’s standpoint, living in a state with a deregulated electric market is the best utility option for you. The option to choose which utility company is the best fit for you ultimately gives you more purchasing power, payment flexibility, and price levels.
For homeowners, choosing to live in a deregulated electric market is not a considerable factor when deciding where to move. For business owners, this is simply not the case. Business owners looking to cut costs, take control of their utility budget, or open a new office building in a new location may consider a deregulated electric market for their next move.
Commercial Electric Provider in Deregulated Markets
UGI EnergyLink is a commercial electric supplier serving deregulated electric markets in the Mid-Atlantic and along the East Coast, in locations including:
- New Jersey
- New York
- North Carolina
- Washington, DC
For more than 127 years, UGI EnergyLink has supplied Pennsylvania and other Mid-Atlantic states with customized solutions, honest pricing, and unrivaled service for commercial electricity supply for small businesses, commercial businesses, institutions, municipal buildings, and more!
Contact us today to learn more about our commercial electric services or click below to enroll!