How to Save Money by Embracing Deregulation
The following is a guest post
During the past two decades there has been an important shift taking place in many areas of the United States: deregulation of the energy market. This shift is giving residents and business owners in many states a choice between energy companies. As more states embrace deregulation of the energy industry, it’s worth taking a look at all the things about deregulation that are a decisive benefit to consumers across the board.
What is energy deregulation?
Deregulation is ultimately a process that creates competition within the energy market. In what used to be an industry dominated by monopolizing utility companies, deregulated markets are now made up of many different entities controlling different steps of the process from energy generation to distribution.
Energy generation companies independently operate their facilities and sell energy directly to retailers. These retailers purchase energy in bulk in order to create a variety of consumer-friendly packages. Retailers also have contracts with transmission and distribution companies which are in charge of delivering energy to consumers. These transmission companies are the remnants of the old utilities, and they still own the infrastructure necessary to bring energy into people’s homes and businesses.
By separating the energy industry into these three parts, the market is now based on competition between energy retailers, benefiting those that create the most desirable products.
Choosing a new energy retailer can save you money
The most exciting element of energy deregulation is that it places all the control in the hands of the consumer. Depending on your usage habits, there are a variety of plans that could fit your needs best. The only way to make sure you are getting the best deal on your energy plan is to compare all the options available to you. There are lots of sites out there that can help you find the right plan, like www.
When you’re shopping around, it’s important to understand what each type of plan requires of you. For instance, many retailers offer fixed-rate plans that allow you to pay the same amount for each unit of energy you use during your contract period. Fixed-rate plans are ideal if you’re concerned about market fluctuation. Many retailers also refer to these products are “price protection” options.
On the flipside there are also plans with variable rates. As the name suggests, the pricing per energy unit of variable-rate plans fluctuates depending on market conditions. People that choose to go with variable-rate plans can make the most of market lows, but are also susceptible to pricing spikes during high-demand periods of the year. Many times variable-rate plans are month-to-month products, meaning that they can also offer consumers more freedom, but without any guarantee of affordable pricing.
There are other things to consider as well. Contract terms are important, as are the ability to sever your contract if you have to move without penalty. No matter what, to ensure that you are able to save money by embracing energy deregulation it’s important to know exactly what you’re getting before signing up with any retailer.
By following that cardinal rule, it shouldn’t be difficult to get an energy plan that fulfills are your needs and allows you to save money on your energy costs.