Electricity suppliers for business

The Competitive Electricity Market

Throughout the 20th century, control of the energy industry rested with a large group of regional monopolies-companies that were the sole providers of the supply and delivery of electricity for the areas they served. Because of the importance of these services to the public, these utilities were heavily regulated by the government.

Since the mid-1990s, a number of states and provinces have deregulated their electricity markets, allowing competition in the industry. This means that customers in those territories can choose an alternative electricity provider (different from their utility) to seek competitive rates and choose electricity products that make sense for their business.

Energy deregulation is very similar to the deregulated telephone industry, in which you may choose your long distance service provider, but your local phone company still maintains the telephone lines. The transmission and distribution portion of your electric bill (the cost to get the power to you) is still provided by the utility, but you can shop for the best prices and services available in the market for electricity supply

What States Have Energy Choice?

Almost half of the states have passed some legislation or regulations to restructure their electric power industry. Ultimately, once the federal government passed the initial legislation around deregulating power generation, it has been up to the individual states to decide whether deregulation is in their best interest and to how they wish to implement deregulation within their borders.

According to the EIA, states that historically had higher-than-average power prices, such as California, Pennsylvania, New York, and most of New England, were among the first to open their retail electricity markets to competition, while other states began with a limited number of consumers. One of the major goals of electricity deregulation is to lower the price for electricity by opening power generation up to competition. Industry analysts have cited Pennsylvania as the most successful state in achieving its goals in restructuring.

Is Energy Choice Good for My Business?

Energy Choice allows you to select who supplies your electricity or natural gas.

Before Energy Choice
Utilities owned the power generation assets and therefore generated, transported and delivered electricity to consumers.

After Energy Choice

When the electricity industry opened up to competition in your state, it ended the utilities' monopolies over all aspects of the energy lifecycle by separating the generation portion, which is now owned by private entities. These privately-owned plants generate the power and then sell it on the wholesale market where energy suppliers, like Direct Energy Business, purchase it for their customers.

Why is Energy Choice Good for My Business?

"Opening up" a market fosters a climate that encourages suppliers of goods and services to provide more options to consumers, in order to stay competitive. In the case of power, "options" can include things like price, term, service and billing/payment cycles. When a market is more competitive, it also encourages innovation and customization to meet the needs of the marketplace.

Energy suppliers have the flexibility to make purchases in the wholesale market at various points in time that can, like any fluctuating market commodity, present more or less savings benefit to their customers. However, utilities who provide default electric supply service typically have less flexibility in their wholesale purchases and therefore typically offer fewer options.

Let's Break it Down to Another "Shopping" Example

An example of flexibility in purchasing and opportunities in market pricing can be seen with shopping for grocery produce, which fluctuates in price quite significantly based on whether the item is in season, or if growing conditions produce more or less than the demand.
See also:
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How and Why Do Policies Change?: A Comparison of Renewable Electricity Policies in Belgium, Denmark, Germany, the Netherlands and the UK (Action publique / Public Action)
Book (P.I.E.-Peter Lang S.A)
Innovation Diffusion and Political Control of Energy Technologies: A Comparison of Combined Heat and Power Generation in the UK and Germany (Contributions to Economics)
Book (Physica)
  • Used Book in Good Condition
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