What is electricity deregulation?

The Choose Energy Team
By The Choose Energy Team May 15th, 2015
For business

Electricity deregulation eliminates the rules and regulations that restrict companies from selling energy. That makes it easier for companies to enter into the market, which in turn gives you more options of where to purchase electricity and natural gas.

In other words, in a deregulated energy market, you can purchase your energy from someone other than your local utility.

Just like how there’s more than one phone company, more than one cable company, and more than one airline, there are multiple energy companies that compete for customers.

See if your area is deregulated.

What deregulation means for you

Since deregulation allows multiple vendors to compete for your business, companies will work harder to earn you and keep you as a customer, either by offering better rates, more flexible payment options, or cleaner sources of energy.

How do energy plans vary?


Suppliers mainly compete on price, which means that switching to a different supplier will allow you to pay less money for the same amount of electricity. There is absolutely no difference in the quality of the energy or the reliability of the service.

Plan Length

Another way plans vary is by the length of their term.  Because prices are always fluctuating on the open market,  you have the option to lock in a long term plan, or a short term plan. You can get plans that are as short as three months and as long as 24.

Long term plans are generally more conservative and safer. They give you long term stability and a steady rate. However, it means you could also miss out on potential savings if the market prices drop.

Short term plans are more adventurous. They give you more flexibility and the opportunity to shop for electricity more often. With a shorter term plan, you could be in a position to take advantage of lower rates if the market price falls. However, you might end up with a slightly more expensive plan if the market rates jump up.

Supplier Reputation

There are plenty of energy suppliers out there, and it can be hard to understand who’s reputable and who’s not. By reviewing suppliers reputations, and shopping from reputable locations, you can make sure that your energy needs are in good hands.

Percentage of Renewable Energy

The percentage of renewable energy in a particular plan is calculated through Renewable Energy Certificates (RECs), which are purchased to match your energy usage. By choosing a 100% green plan, the supplier will purchase as many of these certificates as needed to match your annual electricity usage. By choosing a 25% renewable plan, then the supplier will purchase enough RECs to cover 25% of your electricity usage.

These RECs fund renewable energy projects and ensure clean energy is going on the grid. Likewise, because more clean energy is going on the grid, that means less coal and nuclear energy is being used.

By choosing a green plan, you can help fund clean energy and help remove energy sources with high carbon emissions.

Energy deregulation saves you money

Depending on location, deregulation can potentially mean big savings.

In fact, deregulation has saved Illinois $37 Billion since 1997. That means that the average consumer has saved over $3,500 since deregulation began. Before deregulation, Illinois had the 13th highest energy prices in the country. Currently, it has the 40th highest energy prices – meaning that it is one of the 10 cheapest states for energy.

Find out if you can switch at Choose Energy.

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