What Is Electricity Deregulation?

Posted on January 18th, 2011 by

When an individual or business has the power to choose from whom they purchase goods and services, they inevitably will select a provider or business with the product, service, price and reliability which best suits their needs.

That is precisely the rationale behind the deregulation of retail electricity, a structure which allows Retail Electric Providers to compete for the ability to sell electricity to businesses and homeowners.

With electricity choice, customers can “shop” providers in their service area and choose from a variety of energy plans, including those with renewable energy, various pricing options and added customer benefits ranging from frequent flier miles to those which benefit community causes. 

Not all parts of the U.S. are open to competition in the area of Retail Electric Providers.  However where electricity choice has been introduced, consumers have been the big winners.

Take Texas for example, where retail electric competition was implemented in January 2002.  Since that time, retail electric providers have emerged, allowing millions of Texans to sign up for competitively priced, fixed-rate service plans with terms ranging from six to 36 months.  Some providers even have programs through which customers can select a plan to earn airline miles or contribute funds to charities.  There are also “green” electricity plans with renewable energy.

Moreover, the official Electric Choice website of the Public Utility Commission of Texas, www.powertochoose.org, provides homeowners and businesses with a one-stop resource to view every provider in a particular service area along with their respective offers.  The site also provides useful information to help customers understand their choices as well as questions they should ask of their provider.

Plus, homeowners and businesses have found switching Retail Electric Providers or choosing a new plan with their existing provider to be a fast and easy process.  A customer simply contacts the Retail Electric Provider they have chosen, either by phone or via the company’s website, to sign up for service.

In a matter of days, the customer can be receiving electricity service from the chosen Retail Electric Provider.  There is no need for the customer to contact the current provider.  The process is seamless, with no online casino interruption of service and, in most cases, there is no cost to change providers.   The delivery of electricity to a home or business is still provided by the local Transmission and Distribution Service Provider which maintains the poles, wires and meters that deliver electricity to a particular address.

The presence of electricity choice in Texas and other parts of the country has created a new marketplace, one that provides customers with options that provide greater value for the electricity they use.  Whether it’s securing stable pricing over time with fixed-term plans, earning incentives such as airline miles, building the renewable energy future by choosing climate-friendly, 100 percent wind plans, customers have a choice.  Retail Electric Providers therefore must compete for business by addressing the needs of an informed customer base.

In other words, electricity choice means retail electric providers are held accountable to the ultimate market force – the customer.

Written by Victord Howard, Gexa Energy

Victor Howard is Senior Director, Marketing & Customer Care for Gexa Energy.  The company services residential and commercial customers in Texas, having entered the state’s deregulated energy market in 2002.

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