FAQs
Information About Deregulation
The process to use Deregulation is very simple. Third party suppliers or ESCOS as they are sometimes called work with deregulated states as well as the utility to supply lower rates on electricity. Deregulation has been established for their residents and business owners so they can take advantage of more competitive rates on electricity. Third party suppliers and consultants are heavily regulated and approved by the state’s Public Service Commission.
Breakdown of Your Electric Bill
When you are with the local utility for your electricity you are charged by the utility for the delivery portion (transportation of the electric) and the supply portion (actual electric).
There are two charges that show up on your bill, one for the delivery (about 20% of your bill) and one for the supply (about 80% of your bill). When you choose a third party supplier they take over the supply portion of your bill and the local utility will continue to deliver the electricity.
You will continue to pay the local utility the delivery charge and you will now pay the third party supplier the supply charge.
You will still receive one bill from the utility. You will pay the utility for the third party suppliers’ charge and the utility will then pay the supplier.
It’s seamless, there is virtually no switching!
COMPETITION AMONG THE LOCAL UTILITY AND SUPPLIERS
Many people think ESCOS are in competition with the local utility and they are not. Generally speaking local utilities are not in the business to make a profit they are in business to service the public. They are actually not allowed to make a profit on the supply or delivery portion.
The utility and supplier do not compete with each other but work together. The utility will deliver the suppliers’ energy. You will still pay the utility, who in turn will pay the supplier.
How Do Third Party Suppliers Get Lower Rates Than The Utility
Third party suppliers do not have the overhead of the utility. They don’t perform the delivery service which carries a significant portion of the expense (trucks, line repair and meter reading). They can also pick and choose who they prefer to serve. For example they can choose not to serve residential customers and only work with commercial companies with good credit. By doing this they eliminate the overhead of delinquent accounts.
By picking who they want to serve and only servicing the supply portion they don’t have the overhead costs of repair, delivery or delinquent customers that the local utility does. This leads to about a 10% to 30% savings between the third party supplier’s price and the utility price. They then pass the savings along to the customer and because the ESCO doesn’t have the overhead they can retain a profit.
Frequently Asked Questions
Important things you should know about Deregulation.
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What is Deregulation?
The deregulation of the electricity industry is similar to the deregulation of the oil and natural gas industry in that it divided the electricity business into three separate functions: production or generation, transportation or transmission, and supply.
Generation – the production of electricity
Transmission/Distribution – the transportation from production to end user
Supply – the sale of the electricity
Deregulation allows you to choose your electricity supplier in deregulated states across America creating better prices and customer service. Your local utility owns the infrastructure and will continue to deliver your electricity; a third party supplier or ESCO as they are sometimes called would become your electricity supplier.
Will I Still Be a Customer of My Utility?
Yes. The only difference is that you will also be saving money as a commercial customer of the third party supplier.
Your local utility owns the power lines that carry electricity to your business or organization and they will continue to bill you for the delivery of electricity at rates governed by the state. The actual electricity will be supplied by the third party supplier, an energy service company that constantly shops for the best wholesale prices to keep your costs down.
What If The Power Goes Out?
If you lose power or if you have an emergency related to your power, you must still notify your utility. Utilities are required to respond with equal attention to all of their customers and they do not and can not discriminate against customers that use energy service companies.
Will I Notice Any Changes To My Service?
When you make the switch to a third party supplier, your electrical service will continue uninterrupted. You will still have access to your usage and billing history appearing on your delivery bill from the utility.
Who Is Responsible For Safety And Reliability Of Power?
What If I Have A Question About My Bill?
Will I Still Get My Bill From The Local Utility?
