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The Advantages of a Deregulated Energy Market

The Advantages of a Deregulated Energy Market

The United States energy market has slowly opened up over the last 40 years, beginning in the 1970s with the passing of the Public Utilities Regulatory Policies Act (PURPA). Markets were fully opened with the passage of the Energy Policy Act in 1992 and since then states have been free to deregulate their energy markets if they so desire. While many are still suspicious of deregulation there is mounting evidence that deregulated markets are healthier markets and better for consumers. In states with a regulated energy market, the consumer has no control over their bills other than by choosing the best available tariff. A deregulated market offers many benefits to the consumer.
Lower Prices
In states with deregulated markets ownership of utilities is divested, meaning that the electricity company does not own the power plants that generate power and instead is only involved in supplying you with electricity from the grid and billing you, thus you the consumer do not incur the extra costs of a utility company that has to maintain profitable power plants. 

Greater Choice

In a regulated energy market, the consumer has no choice about the supply of their energy beyond the tariff they sign up to. In a deregulated market the customer can choose from a number of suppliers who are motivated to offer better and cheaper services than their competitors and many operators in deregulated markets offer loyalty discounts for long-term customers.

Flexible Contracts

In a regulated market, consumers generally have 3-10 tariff options from a single supplier and, because a regulated market necessitates that all contracts with customers adhere to the regulations, there is limited flexibility with the tariffs available. By contrast, in a deregulated market the energy supply company is able to offer more personalized options according to the needs of individual customers.

No Interruption of Service

Utility companies in deregulated markets act as providers of last resort (POLR), which means that if your existing energy supplier is no longer able to supply you emergency cover, there is cover available, albeit at a higher rate. Because companies in deregulated markets are only involved in the supply of energy, and not its production or distribution, if you decide to switch from your local state provider you will simply receive a different bill with no interruption to your service.

Greener options

With greater choice and competition comes greater scope for greener forms of energy consumption. Surveys suggest that 77% of Americans worry about the environmental impact of their energy consumption. Regulated markets are often much slower to adapt to new technologies as there is less commercial incentive to do so.

If you live in a regulated state there are still steps you can take to reduce your energy bill; ensuring that you are signed up to the most appropriate tariff and ensuring that you switch off the power to devices that are not in use will both help to reduce your energy needs.