Energy Choice: What Is it and Where Is It Allowed?
In most economic marketplaces you engage in on a daily basis, you are presented with a myriad of choices. There are many different computers you can buy from a myriad of competitors, the highway is littered with gas stations representing different companies, and even if you want a fast food burger on that highway you’re sure to pass half a dozen different options to scratch that need. The existence of those different options puts you, the consumer, in the driver’s seat: depending on what you prioritize you’ll make your selection. Do you pick the computer that’s got the highest memory or the one that comes with an operating system you’re comfortable with? Do you go to the gas station that has a lower price or the one with a great rewards card? And for that burger—do you go with the restaurant who represents your values more or the one where you get the most bang for your buck?
What does this have to do with energy? Well, the power industry is one of the only markets most consumers will operate in where they don’t have this type of choice and are required to buy the offering from the only option provided to them. And this isn’t a product that consumers can choose to go without if they’re unhappy with their provider, this is the electricity required to run their homes.
This setup is the source of much frustration to consumers who feel they aren’t getting the best possible service from their power providers, as their monopolies have removed the companies’ incentive to improve and innovate. To push back against that, a number of states across the country have implemented deregulated markets, or markets where customers can choose their power provider.
What does this mean for customers? And who can take advantage? Keep reading to find out.
Implementing Energy Choice
For most of the history of the modern grid, monopolies have ruled the electricity generation industry. Because it would be economically and logistically infeasible for multiple entities to build out transmission and distribution systems to deliver power to homes, customers were presented with one option based on where they live and government regulatory bodies would provide oversight to ensure that those companies were delivering satisfactory service at a reasonable price to consumers.
However, by the end of the 20th century there were many who felt that utilities were taking advantage of this setup. Regulatory bodies allowed them to increase rates to help them build out new infrastructure and facilities, but there wasn’t any oversight to ensure these investments were actually helping out the customer. Worried that utilities were simply building capital-intensive projects because it was easy to get higher rates for it, a number of states started deregulating the energy markets.
When this happened, the local utilities would still be in charge of the transmission and distribution grid, maintaining the infrastructure and charging customers for their access to it. However, other operators would be allowed to enter that grid and sell their energy to customers through that grid. Customers would have the choice to sign contracts with utilities other than the legacy company to take advantage of the offerings of these other companies, and all the free market benefits of such an arrangement were newly available to them.
Benefits to Customers
As noted regarding the choice of computers, gasoline, or burgers, customers can make their selection based on whatever criteria matters most to them. When it comes to power generation, you may assume that all energy delivered to a home is the same, but that’s the thinking the legacy utilities rested on without competition. Competition by other companies breeds innovation, creative offerings, and the best possible prices—all characteristics that ultimately benefit the customer.
If customers only care about attaining the cheapest electricity possible, they can seek out the power provider on their grid who is offering the best prices. For green customers who want to support clean and renewable energy sources, they can find the power providers offering the greatest carbon-free energy mix. The competition of energy choice even allows utilities to get creative with how to reward loyal customers through new and unique programs. Atlantic Energy, for example, offers customers utility bill audits and bundles of smart home products to bring energy use in homes to the 21st century, in addition to a clean energy mix that’s priced ahead of the competition. These are offerings that a monopoly utility company would not have to offer, because their customers have no option but remain customers. But with an open market with energy choice, customers are empowered to seek out the utility that matches their needs, values, and price points.
Where It’s Allowed
To date, a majority of states still do not offer energy choice, and there are also restrictions and complications in knowing where such choice and exists and for which customers. Some states restrict energy choice to just electricity and not natural gas, or vice versa. Other states offer for all sectors and some offer energy choice just to large commercial or industrial customers.
For residential consumers of energy, though, the following states offer at least some degree of electricity choice:
For residential consumers of natural gas, the list of states that offers some form of energy choice includes:
Because there are restrictions even within these states, it’s important to do research or contact your utility to see what options you have. For residents of New York, New Jersey, Pennsylvania, Ohio, Illinois, Maryland, Connecticut, Massachusetts, and Washington DC, Atlantic Energy is one of the options you may have as an alternative energy provider. Contact us today to learn if you’re eligible and find out what great programs, prices, and clean energy services we can offer you thanks to the system of energy choice!