In most of the United States, your energy provider is predetermined based on where you live. That comes with some benefits, including convenience, but the drawback is that you miss out on an opportunity to save money. If you live in a state with a deregulated market, however, you might have more options than you realize, as CNET reported.
What is energy deregulation?
According to CNET, 18 states have fully or partially deregulated energy markets. That means that, in those areas, the state allows multiple energy companies to compete for residents' business.
Per CNET, the states with fully deregulated markets, where you can choose your provider anywhere in the state, are:
• Connecticut
• Delaware
• Illinois
• Maine
• Maryland
• Massachusetts
• New Hampshire
• New Jersey
• New York
• Ohio
• Pennsylvania
• Rhode Island
• Texas
The District of Columbia also has a deregulated market.
Outside of those states, the other five where you can choose your provider in certain areas are California, Georgia, Michigan, Oregon, and Virginia.
Joshua Basseches, an assistant professor of public policy and environmental studies at Tulane University, told CNET that "deregulated" is a misnomer and he prefers "restructured." That's because, even in those restructured states, the competing energy companies are still regulated by the state's public utility commission.
"What's often referred to as deregulation is the difference between what's known as a vertically integrated utility monopoly enterprise — where the utility company generates, transmits and distributes electricity — and a deregulated or restructured environment, where various aspects of that supply chain are opened up to competition and only parts of the cost are regulated by the commissions," he said.
Why is it important if your state's market is regulated?
When the state regulates the energy market, it creates a form of monopoly, CNET stated. There's only one electricity provider available, and you have to pay whatever it charges — except that the state may regulate this.
When there are multiple suppliers, differences can emerge. Suppliers use various energy sources, such as coal-burning power plants, nuclear reactors, and solar farms. They also set their own prices and may offer different plans to buyers.
Some sources of energy, including solar and wind, are more affordable than traditional options such as coal.
These affordable energy sources also create much less air pollution. That's good for human health, since pollution has been connected to respiratory problems, severe health issues, and premature death. It's also good for the environment, because many types of air pollution eventually trap heat in the atmosphere and warm up the planet.
How can I save money in a deregulated market?
If you live in a deregulated area, choosing the right energy provider for your home is one of the fastest ways to slash your electric bill. By comparing available plans, you can find the provider with the best deal — not to mention see which company is providing the cleanest, least polluting energy. SaveOnEnergy has a free tool that lets you make direct comparisons among all your local providers.
"What is clear is that restructuring gives consumers more choice and more direct say in what kind of electricity they want and how much they'll pay for it," Basseches said, per CNET.
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