Traditionally, regulated electricity markets existed across the United States, restricting customer choice. It wasn’t until the 1970’s that the idea of deregulation came into play, with the passage of the Public Utilities Regulatory Policies Act. This act began an age of restructuring for the energy industry. Consequently, in 1992, the passing of the Energy Policy Act opened the market further. The Energy Policy Act’s goals were to increase the use of clean energy and energy efficiency. It broadened choices for utilities and created new rate-making standards. Since then, deregulated energy markets have spread across various states, but what are the differences, and what does the future hold for electricity markets?
What is a regulated electricity market?
A “regulated electricity market” contains utilities that own and operate all electricity. From the generation to the meter, the utility has complete control. The utility company owns the infrastructure and transmission lines then sells it directly to the customers. In regulated states, utilities must abide by electricity rates set by state public utility commissions. This type of market is often considered as a monopoly due to its limitations on consumer choice.
What is a deregulated electricity market?
A “deregulated electricity market” allows for the entrance of competitors to buy and sell electricity. Generation owners then sell this wholesale electricity to retail suppliers. Retail electricity suppliers set competitive prices for consumers, which are often referred to as the “supply” portion of the electricity bill. It often benefits consumers by allowing them to compare rates and services of different third-party supply companies (ESCOs) Also, in a deregulated market, there is increased availability of renewable sources and green pricing programs.
While deregulated electricity markets offer a broader range of renewable energy options, there are still options for consumers in regulated states to reap the environmental and economic benefits of green power. For instance, Power Purchase Agreements allow for the investment in a project outside of your state, providing benefits through renewable energy certificates (RECs). Although they are unable to incorporate renewables directly into your electricity supply contract like in deregulated markets, the green options are growing for regulated markets.
Our goal at ABEST is to serve New York residents with renewable electricity to help reduce their carbon footprint. Our focus has been to educate and help individuals do their part too and help fight against climate change by offering eco-friendly products and services. Renewable energy helps to reduce emissions by creating a way to move away from fossil fuels, which contribute, to the greenhouse gasses.