How Does Energy Deregulation Affect Me?

29 October, 2020

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What does “deregulated market” mean?

 When a market is deregulated, it simply means that government influence has been removed or downsized considerably from a particular industry. In a regulated market, consumers have no choice but to buy a product or service from only one provider. Although 17 states have some form of energy deregulation, many states still have only one option when it comes to who they purchase their energy from.  Proponents of energy deregulation say that it is better for the economy and for the consumer because competition drives down costs and causes incentive to offer a better product or service. Consumers also have options to choose from which rates and services best fit their needs, which wouldn’t otherwise be available in a regulated market.  

What are the deregulated energy states?

 Energy deregulation in some form or another currently exists in California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas and Washington D.C. 

When was the energy market deregulated in Ohio?

 Natural gas deregulation in Ohio first came about in 1997 but it wasn’t until 2001 that Senate Bill 3 took effect which gave consumers the ability to choose between energy suppliers. During the first five years of deregulation in Ohio, the law instituted a 5% decrease in residential rates. Additionally, it required a rate freeze until 2005. Since 2009, however, the Public Utilities Commission of Ohio (PUCO) has been required to approve all rates.  After seeing the success in energy deregulated markets across the U.S., more states besides Ohio are putting energy deregulation on the ballot.  

How does deregulated energy work?

 If you live in a deregulated area, you don’t have just one but several choices for where you want to source your energy. Companies offer to sell their energy at the lowest rate while independent agencies buy the amount of energy they think they’ll need over a set period of time which determines the rates they can charge their customers. Customers still need to go through the local utility company, but their power (and bills) will come from the supplier they’ve chosen. 

Why deregulation in power system is necessary?

Deregulation (and therefore, competition) is necessary in a society that values high quality and affordability. Competition is what drives the motivation between suppliers to provide the best service they can for the best rates they possibly can, meaning customers reap the greatest rewards. Consumers are also able to choose to be more energy efficient if they decide to go with suppliers who are more energy conscious, something that couldn’t otherwise happen in a regulated energy market.  In sum, deregulation has and continues to be a movement that is in the best interest of the community. It’s because of energy deregulation and supplier competition that Ohio residents and business owners enjoy lower rates and better service.  See our rates and how much you can save by switching to Kratos today.