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Energy Deregulation

Thursday, May 26, 2016 ENERGY 101ENERGY DEREGULATION

Energy Deregulation: Giving Suppliers More Freedom – Energy Guide 101

Deregulation separates energy production from energy distribution, giving suppliers more freedom to define their own products and services for consumers, and set their own prices. Many countries and states have opted to deregulate their gas and electricity markets in order to generate more competition amongst energy suppliers and stimulate productivity, so that the supply can keep up with our spiralling demands.

In deregulated markets, energy suppliers can offer a variety of service plans and rates, and customers are free to choose (just as we are free to choose our internet provider, for example). However, regardless of your supplier, the actual energy you receive will be the same. That’s why you can switch supplier to get a better deal without needing a whole network of new lines installed – so that’s pretty handy!

Deregulation Around the World

There is great variation across the US in terms of energy deregulation of the natural gas and electricity markets. Some states, such as New York and Illinois, are fully deregulated for both, while many others remain regulated (Minnesota and Mississippi, for example). Some are deregulated just for natural gas (eg. Washington and Florida) and some just for electricity (eg. Maine and Delaware).

The UK has adopted full market deregulation for gas and electricity, as have all of the original EU member states.

Outcomes of Deregulation

Energy deregulation, by nature, does sound rather careless – it paints a picture of a free for all playground for suppliers, with fewer restrictions and no strict adult supervision. However, there are many benefits to this way of doing things, for suppliers and consumers alike. Increased competition, and the potential for more private sector investment, stimulates the market, and greater freedom allows suppliers to differentiate themselves from the pack with their products and services. Such variety and flexibility gives more opportunity for consumers to hunt out a service that is tailored to their needs, find the best deals and make significant savings.

But of course, the removal of rules and regulations does have its potential down sides. For example, concerns have been raised about the risk of removing strict safeguards, and the increase in pollution as supply continues to intensify.

For consumers, the sheer diversity of options and explosion of choice can be pretty confusing – especially when it doesn’t actually affect the power that you receive. When it comes to renewing or changing your contract, it can feel as if you’re standing in a crowded marketplace with stallholders bombarding you from every side with their “unbeatable” deals. How do you make sense of what you’re actually being offered, and can you be sure that you’re not missing out on something better? This is where an energy broker or consultant could come to your rescue. With their thorough understanding of the market (and – crucially – their ability to speak the somewhat unique language of the energy industry) such experts are able to seek out the best suppliers and rates for your home or business so that, despite the unprecedented array of options, you can make an informed decision.

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