As a note, for this article, I am generally writing about electricity markets, although some states have chosen to deregulate their natural gas markets as well. At a very high level, the general difference between the two is that a deregulated market allows for competition within the electricity supply, whereas in a regulated state, utilities can hold monopolies on the electric system. In deregulated states, generation is separate from distribution and transmission, and consumers can choose to buy their power from different companies although a main utility is still responsible for delivering the power through the transmission and distribution lines.
Deregulated markets, also called choice markets, are often most beneficial for larger commercial and industrial customers. Being able to shop around for their electricity and sign contracts for particular rates can help companies negotiate lower costs and more easily predict annual utility budgets.
Residential customers tend not to see significant benefits between a regulated and a deregulated market. In regulated states most renewable energy projects are utility-owned. Furthermore, few utilities offer green pricing programs that fully meet the Corporate Buyers Renewable Energy Principles of cost-effective and impactful renewable power. The good news is that even if you are located in a regulated state you can still engage in renewable energy, either on your own or aggregated with other organizations.
Your company can then claim the benefits of this renewable energy by retaining ownership of project-specific renewable energy certificates RECs. Your existing grid power supply arrangement will stay in place, while your company is helping green the grid in the U. If you are located in a deregulated state , there are more options, some of which include incorporating renewables directly into your retail supply contract.
Your organization can also aggregate demand with others to create a larger impact project than you would have accomplished alone. In regulated states or if you have already contracted with a RES , consider efficiency upgrades — LED lightbulbs, motion centers and enrolling in demand-response programs are all opportunities to reduce your use.
In deregulated states, you should first check what rates RESs have to offer. Of course, the most effective and efficient way to move the needle on electricity costs is to contract for large-scale renewable energy. How much value can a large-scale renewable energy asset add to your company? Use our calculator to get an indicative estimate. They include: Transmission charges : Because generation assets are rarely located in heavily populated areas, electricity is transported over high-voltage transmission wires.
The owners of these wires charge for access and this cost is passed through to end-users. Line loss charges : These charges arise because electricity cannot be transmitted without resistance, causing generators to put more power into the grid than is taken out.
Taxes : There are generally several state and local taxes that make their way onto a given utility bill. Customer service charges: While these charges are typically embedded in other parts of the bill, in some utility territories, customer service charges appear as a separate line item. In deregulated markets, if using a RESs, find out where generation assets are located. The closer assets are to your site, the lower your transmission and loss charges will be.
In all markets, consider how and when your organization uses energy and work to avoid spikes in use as much as possible. A single spike in use can add excessive demand charges to your bill. If your organization is considering a large-scale renewable energy solution, due diligence must include reviewing congestion around transmission lines and ensuring use of high-voltage lines for maximum efficiency.
Oversupply drives market prices down and forces generators to recoup their costs through higher rates. Attention: JavaScript is not activated! Please enable JavaScript to enjoy the full functionality of this and other websites. It often benefits consumers by allowing them to compare rates and services of different third party supply companies ESCOs and provides different contract structures e.
Also, in a deregulated market, there is an increased availability of renewable sources and green pricing programs. While deregulated electricity markets offer a broader range of renewable energy options, there are still options for consumers in regulated states to reap the environmental and economic benefits of green power.
For instance, Power Purchase Agreements allow for the investment in a project outside of your state, providing benefits through renewable energy certificates RECs.
Although unable to incorporate renewables directly into your electricity supply contract like in deregulated markets, the green options are growing for regulated markets.
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