Prior to electricity deregulation in select areas of the United States, the electricity that powered homes and businesses came from the utility company and customers could not compare electricity providers. With electricity deregulation continuing to expand and electricity providers in the mix, residents and businesses should be sure to understand where their electricity comes from, how it’s delivered, and how the cost is divided.
Electric Service Basics
Electric service is made up of three separate parts, collectively referred to as the “electrical grid”:
- Generation – Generation is the production of electricity by power plants
- Transmission– Transmission is the movement of electricity from the point of origin to a distribution system
- Distribution– Distribution is the delivery of electricity to customers’ homes or businesses by utility companies
Prior to electricity deregulation, power was supplied by regional utility monopolies that could own and operate all three parts of electric service. In response to a growing demand for competition in the industry, spurred by the success of deregulation in the airline and telecommunications industries, Congress passed the National Energy Policy Act in 1992 which created wholesale electric markets that allow for open access of generation.
Similarly, in the 1996 Order 888 from the Federal Energy Regulatory Commission required utilities to open their transmission lines to competitors. This opened the door for states to pursue deregulation, and nearly half have done so.
Retail Electricity Providers
Going back to the three components of the electric grid, customers in deregulated areas can choose who supplies their electricity. This is different from the distribution, transmission, and generation of electricity.
Generally, the generation of electricity is unrelated to anything on your bill. Power plant companies generate electricity and sell it to utilities as well as retail electricity providers in deregulated areas. The electricity is then resold to you, the customer. Transmission and distribution is taken care of and charged to you by your utility, regardless of what company supplies the electricity. These charges are separate from the supply portion of your bill.
Compare Electricity Providers
Deregulation allows you to choose from a variety of retail electricity providers, much like you’d shop around for a telephone or internet provider. When choosing an electricity provider, the process is completely hassle-free. You will not have any service interruptions, your electricity will still be just as reliable as before, and your monthly bill will continue to arrive. If your power goes out, your utility will still be the one to call. The only change will be under the supply portion of you bill. There, you will see the provider you selected and the rate you approved.
In deregulated areas of the country, competing retail electricity providers offer a range of packages for residential consumers. Plans may have fixed- or variable-rates, may have terms that last from one month to two years, and may include partial or 100% renewable electricity.
Deregulated areas can be found in all or parts of Illinois, Texas, Ohio, Pennsylvania, New York, New Jersey, and Maryland as well as several other states in New England.
For more information on a particular provider, choose from one of the many electricity providers listed on the right side of this page.
To compare electricity providers in your area, simply type in your zip code into our comparison tool. click “search” and then select your utility.