Deregulation of Energy 101

  • Added:
    Sep 10, 2014
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Deregulation of Energy 101 Photo by Michel Leerca

The energy industry has been notorious for having legal monopolies or duopolies that wherein one or two power suppliers have all of the electric and gas customers in a state. To make the energy industry more competitive and consumer friendly, many states have deregulated their energy industries. Residents of Pennsylvania, one of the most recent additions to the deregulated energy club, are enjoying the benefits of competitive electricity supply rates.

How many energy suppliers are there in PA thanks to deregulation?

Before deregulation, there was only one energy supplier that many Pennsylvania electric customers could access. This posed a problem, because this meant that electric suppliers in PA could charge people whatever rates they wanted without worry about widespread consumer backlash in the form of lost customers. Thanks to deregulation, there are now dozens of electric suppliers in PA; this has enhanced the competitiveness of the market, which has in turn helped Pennsylvania customers gain lower energy rates and more company-specific benefits (ex. switching bonuses).

Does deregulation mean that the electric suppliers in PA can run wild?

Absolutely not. Although the phrase “deregulation” has become a common term for the changes in the energy industry across the country, it is not deregulated. Instead of true deregulation, what states like Pennsylvania have done is stripped away the restrictive laws that had allowed the big electric suppliers in PA to hold monopolies for years. Many of the energy laws in PA have actually become more restrictive to protect consumers against predatory business practices.

How will deregulation affect my electric rates?

If you find the right electric supplier, then you could see a dramatic reduction in your electric rates. The competitive market created by deregulation means that many electric suppliers in PA will be willing to lower their rates to gain more customers.

Will the quality of my electric service suffer as a result of deregulation?

No. Your electricity will be run from the same power grid as before. In some cases, you may even continue to receive an energy bill with your old energy supplier’s name on it.

Is deregulation perfect?

No. As with any politically charged issue, there will be people on either side of the fence touting the pros or cons of something; as a result, you may have heard stories about PA customers receiving exorbitant energy bills shortly after they took advantage of deregulation. While some of these stories are true, they are not directly caused by deregulation, but rather by a lack of information and deceptive marketing practices of a select few electric suppliers in PA.Legislators are working now to enact laws that will prevent companies from doing this to customers.

What do I avoid?

In order to prevent yourself from being the victim of deceptive marketing tactics like we mentioned above, you need to ask and carefully consider the following questions:

•Do you charge your customers late fees?
•Are there any signup fees?
•Is there a contract? If so, how long are the terms?
•Do youcharge an early termination fee? If so, how much?
•Do you require a security deposit? If so, how much is it and what are the requirements to get it back?
•Is the rate fixed?

Asking all of the above questions will give you a clearer perspective on how a candidate to be your next energy company will treat you. The question of whether or not the rate is fixed is the most important one for you to ask. The most common way that PA customer’s fall victim to excessively high electric rates is by being attracted to extremely low “introductory rates” of a variable rate plan. The problem with this is that as the name suggests, variable rates vary and they can fluctuate to very high extremes at any time.  Generally these changes occur once a month.

You should always avoid the trap of variable electricity rates by signing up for a fixed rate option. Although the rates seem as though they are higher at first glance, you willactually save hundreds, and sometimes thousands of dollars on your energy bill by only considering a fixed rate.
How do I find alternative electric suppliers in PA?

While you may have received marketing communications from some of the post-deregulationenergy suppliers in PA, they are not the only ones. To find the best rates in your area, visit MaketheSwitchUSA.com. They will provide you with a comprehensive list of energy suppliers in your area that allows you to compare and contrast each company’s offerings.

Author's Profile

Author writes various articles and blogs about the electric suppliers in PA that gives some useful information and suggestions about saving money on your electricity bill.


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