How To

What is Deregulated Energy?

There have been a lot of changes in the ways business owners get their energy over the decades. It’s not just the rise of new technologies like solar or even wind that have impacted energy and how we consume it. Even the ways we pay for our electricity and who it is that provides that energy to use have seen some adjustments over the years.

When it comes to consumer choice for electricity, one of the biggest “back-end” changes has been deregulated energy. The types of deregulated energy markets vary from one state to the next, so while one state might enjoy deregulated gas, you might not, but you may have access to deregulated electricity.

So what exactly is deregulated energy? How does this affect you, your energy and how you pay for it, and why are there different deregulated states for energy?

Let’s take a closer look at it all and see.

A Simpler Time With Higher Prices

In the past, the majority of energy Americans got was regulated. While that may sound like it just means the government controlled or oversaw the creation and distribution of energy, this wasn’t actually the case. What it did mean, however, was that there was usually a monopoly of sorts on the energy that people received, meaning they had no choice. After all, if only one person is calling the shots, why should that person be flexible or pay attention to what customers want? The customers have nowhere to go.

In a regulated energy market, one company controls all aspects of electrical generation: the actual electrical generator, whether that is coal, nuclear or hydroelectric, the transformers that receive that energy and distribute it across the grid, and of course, the poles, wires and other means of distributing that electricity to the households or businesses that require it. At every step of the energy creation and distribution process, one company controlled every single aspect. And that meant that consumers had play by their rules.

 

The Arrival Of Choice

In the 1970s, the government stepped in and started encouraging the break-up of this kind of control, though it did not make it illegal. Different companies stepped in and began competing with each other for consumer dollars, just like any other honest business. This break up of big companies to encourage more competition was called deregulation, and these deregulated energy markets offered more consumer choice for energy.

Electricity Today

Many Americans now have a situation where the gas, electricity, or both are deregulated, and there’s a choice of different providers. However, not every state enjoys this. Yet, for states that participate, there’s a lot of consumer choice for energy, whether it’s gas, electricity or both. It means that for people living in the right state, not only do you have your pick of providers for electricity or gas; you may even enjoy different packages, such as locking yourself into rates for one year, three years, or other packages that give you more control over your spending.

How Energy Deregulation Helps Small Businesses

For people that are running their own commercial ventures, when you’re starting out, or just aimed at staying small and more in control, every expense matters. Staying profitable can be both challenging and rewarding, but one of the easiest ways to lose more money to your operations than you intended is through waste. Low operating expenses is all about making sure you don’t use more than you need, and thus don’t pay for more than you need.

Utilities like electricity and natural gas are part of these unavoidable, monthly maintenance expenses. But just because you have to pay for electricity to keep your computers, photocopy machines, lights and other hardware running, it doesn’t mean this is a fixed expense. You have a lot of different ways to exert more control over this and deregulated energy is one of them.

If you live in one of the states where deregulated energy is available, and there are third-party providers that service your area, you now have a choice. Instead of simply accepting the one electrical or gas service that is available to everyone else, you can shop around. Now that you have more than one possible provider, as with any business-to-business vendor you might deal with, you should do some research.

Promotions & Loyalty Incentives

As with other competitive services, like cellular phone or Internet provisions, third-party energy providers have to work hard to earn and keep their customers. This often means that for people that “strike when the iron is hot,” there are special promotional events or even loyalty programs that you can subscribe or sign up for.

This means that rather than a straightforward “hostage affair” of always knowing you’ll pay the same amount for your energy, you may enjoy discounts, special offers, and other rewards as enticements to keep you signed on for a particular service.

Better Customer Support

When you know that your customers have no choice but to come to you, this provides very little motivation to have quality support or technical assistance. When you know customers have every motivation to find a better deal or service, this makes you work harder.

Choosing to go with a deregulated energy provider means that you can select the one with the technical or customer support you feel the most comfortable with. This may be critical for certain small businesses with a greater than average reliance on electrical power or gas provision. Fortunately, now that you have more choices, if your customer support is unsatisfactory, you can always leave and look for a new provider. You don’t just have to live with it anymore.

How Does Energy Pricing Work?

On the surface, especially if you’re living in a state with regulated energy providers, the price of energy is a moot point. How much the electricity or natural gas costs doesn’t matter to you, because you only have one provider for it, and therefore, have no choice but to pay whatever rates they establish. Unless you can suddenly run your home without electricity or natural gas, there simply isn’t another option. However, if you live in a state that allows for deregulated energy, then your ability to choose different energy providers means that you now have different choices in prices.

So what goes on behind the pricing of energy? If you have a choice in your rates and plans, what factors will actually affect those rates? Let’s take a quick dive into the driving variables of your energy pricing.

The Commodities Market

Like any essential goods or services, electricity and natural gas are resources/ commodities, and thus, their pricing is subject to many different economic factors. Supply and demand are, of course, the two biggest and simplest factors, but in addition to this, there are quite different variables that also have an effect. It is the interplay of these different variables that energy providers take into account when they determine their pricing.

However, if you take the time to understand some of these considerations yourself, this can help you to anticipate how your energy will be priced. And if you can anticipate, you can plan and maybe even get some savings thanks to your foresight.

Seasonal Factors

There are definitive times of the year that will see “spikes” in energy usage, and most energy pricing will account for this. People with furnaces in their home, for example, that burn natural gas for heating purposes will see a large, daily increase in gas usage during the winter months. The furnace must now be put to work to keep the home warm.

Conversely, summer is another peak season, but usually for electricity to power air conditioners, in order to keep homes cooler. This means that the transitional seasons of spring and autumn are usually less energy intensive. Take this seasonal consumption spike into account when looking at your pricing and even ask your providers about it.

Weather Events

While seasons can be predicted with great confidence and reliability, the actual weather conditions during those seasons can be much less certain.

Everyone knows energy bills in the winter will rise due to heating concerns, but if an extraordinary weather event occurs, such as a snowstorm that causes electrical shutdowns, or a cold snap that runs for an extended period, and makes hefty energy demands, this will affect pricing.

How to Choose the Best Third-Party Energy Provider

Location Is Everything

The first, most important consideration for finding a third party energy provider is first to see if this is even possible for where you live or work. Not every state has access to deregulated energy providers, so you need to know if you live in an area where this is an option. If you live in Michigan, for example, you can choose different gas and electricity providers. If you live in Oregon, you only have a choice of deregulated electricity. But if you live in North Dakota, you only have your traditional, regulated energy provider.

Even where you live in the state can have an effect on what your options may be. In Texas, for example, some areas are deregulated while others are not. So while residents of Dallas have a big choice in electrical providers, residents of Austin are still on regulated electricity. Always make sure you confirm whether your state has deregulated energy options, and what your options—if any—are for your residential or business address.

Pricing & Plans

The primary reason you’re looking into a third party energy provider is that you want more choice. With a traditional provider, you’ve only got whatever rate is being offered, so it’s either accept that rate or deal with no electricity or gas.

If you’re now shopping around for a third party alternative, make sure you’re exploring your options and finding out just how many you have. A good provider will have different pricing structures and plans depending on what your needs are. So if you’re looking for something to suit your business/commercial needs, plans optimized to this should differ from what a homeowner would look for if they were in the market for a residential plan.

Also make sure that when you look at pricing, there’s transparency involved. There shouldn’t be any small print or “hidden” fees that only come up after you’ve signed on. The most reputable and trustworthy providers will have earned their customers through honesty and transparent pricing structures with no unpleasant surprises.

Quality Customer Service

It should come as no surprise that when you’re dealing with a monopoly, customer service and support isn’t high on the list premium features that will be offered. After all, there’s no reason to actually maintain a high level of quality, since it’s very nearly a captive audience. Unless you think your household can function without electricity, you have no choice but to deal with a regulated energy provider on whatever terms they dictate.

With third-party providers, you finally have a choice, so make sure you use it. Ask questions about getting the level of support you want. More importantly, do your research! Established companies will have been “peer reviewed” by customers just like yourself. Make sure you look at those user reviews to see whether the provider you’re considering is giving the type of customer support you want for your home or your business.

Let Us Help You Decide

Energizer® Power Portal is here to help you get a start in your search for the right provider! Just reach out to us and explain your needs, or take advantage of the features on our website. We can help you to find out if your state gives you third party options, and let you fill out a power consumption report that will help align you with the gas or electricity providers that meet the needs that you have. All you have to do is get in touch with us, and together.

 

Pricing Structure:

The Difference Between a Fixed & Variable Rate Plan

Fixed Rate

This is the type of plan that most business owners are familiar with, and it’s important to make the distinction that fixed rate does NOT mean “flat” rate. This isn’t like an Internet connection with unlimited bandwidth where you pay the same price every month, and it doesn’t matter how many Gigabytes of data you upload or download, your monthly cost is the same.

Instead, a fixed rate simply means that your energy provider has determined exactly how much you will pay for every Kilowatt Hour—or kWh—that you use. Your electricity meter will keep a running tally of your energy expenditure, and, when the time comes at the end of the month, your kWh usage will be measured, and you will be charged a monthly fee appropriate with just how much you used.

The rate of your kWh usage will be agreed upon beforehand, and no matter what other changes occur in the year or the day, that rate will always remain the same. You may sign on for a fixed rate that remains the same for a few months, or for a few years. Usually, if you decide that you’d like to end your fixed rate before your contract ends, there will be additional termination fees incurred.

The Variable Rate Difference

With a variable rate energy plan, there is an element of risk involved, as you now “peg” what you pay for electricity to a changing market. There are various factors that can affect the pricing of electricity, including natural factors such as weather, or the temperature.

With a fixed rate, you are “immune” to these price fluctuations. Whatever price has been agreed to in your contract, that’s what you pay regardless of the current pricing on electricity. With variable rate energy plans, however, the price of your electricity can change on monthly, weekly, or even hourly basis depending on circumstances.

This means that if there’s a surge in electrical production, such as more solar power generators coming online, for example, and your area experiences a surplus of electricity, where there’s more supply than demand, the price can fall pretty dramatically.

The flipside to this is that if anything happens to the electrical situation in your area, such as a natural disaster taking out some electrical generation plants, and driving the cost of electricity up as it comes from other areas, this means that you will end up paying more as well.

For people that want the absolute lowest prices they can get on electrical power, this is the only way to achieve it, but of course, it is always temporary, and there will be fluctuations. People who keep an eye on the energy market and can anticipate trends are a good candidate for variable rate energy plans. People who are temporarily looking to lower their costs are also good for these plans, as there is usually no termination cost for deciding to end the plan and switch over to another.

Find The Right Plan For You

Your best chance of choosing between a good fixed rate or a promising variable rate is to go with a third party energy provider. If you live in a deregulated energy state, then Energizer® Power Portal can help with that. Just get in touch with us, fill out our energy usage form, and we can take your energy data and match it up with energy providers in your area that are fully vetted and approved. You’ll have your pick of different contract lengths, terms, pricing and plans. Find the fixed or variable rate plan that gives you what you need!

Tips for Reading Your Bill: What is a Kilowatt Hour?

To get a better understanding of your electrical bill, and why you pay what you do, you need to understand how these costs are calculated. It all begins with what seems like a fairly simple phrase, the “kilowatt hour,” which likely does not mean what you think it means.

Your Usage Is Not Fixed

The kilowatt is the basic unit of measurement for electrical energy. Despite America being largely still on the Imperial system of measurement, electrical consumption is one of the rare areas where we join the rest of the world in using the easier, more precise metric system. A kilowatt is simply 1000 watts, and a watt is simply a measure of energy (joules per second) that translates into how much power is used during that period of measurement. If you have an extremely powerful drill that uses 1000 watts, that means that you’ll need 1000 watts, or 1 kilowatt of electrical energy just to keep the thing on and running. This is a measurement of the power that is required to keep the device operating. So what does a kilowatt hour do?

Here’s where it gets specific.

Power vs. Energy

If a kilowatt is a measure of power, a kilowatt hour is a measure of energy, which, in other terms, simply means the rate at which 1000 watts per hour of energy is consumed. So if you have a 100-watt light bulb that uses up 100 watts every hour it would take 10 hours for that light bulb to consume 1000 watts or 1 kilowatt. On the other hand, if you have a furnace that burns up 2000 watts, of power in one hour, that means that actually means that it only takes 30 minutes for it burn up 1 kilowatt.

So the measurement of kilowatt hours that is used to track your energy usage is all about how quickly your business is using up kilowatt hours on a daily basis. It is not about how many kilowatts you are being billed for every hour.

Proper Comparisons

This is why it is very, very important for people to make note of their kWh usage, not their kW. KwH is a measurement of your rate of usage. When looking at different energy providers, one of the things that can actually affect the rates you will be offered is your kWh rates, which can be determined by looking at your bills, or filling out an energy report and getting the calculations back.

This means that once you know how many kWh you use per month, you can take that information and “plug it in” to a rates comparison for an electric or gas provider. But make sure you get the right measurement. If you put in that you use 4000 kWh per year, but the energy report is asking how many kWh you go through in a month, this is going to give you some very different results.

How Does Energizer® Power Portal Work?

Simply put – we review, analyze, and ultimately provide you with the best power

providers at the best rates available. We do the homework work for you.

Our goal at the Energizer® Power Portal is to provide an agnostic, all-inclusive consumer platform, focused on educating the customer, while providing power options to make the home and business a more intelligent one.

With this in mind, we hope to empower consumers to make cost-effective energy decisions with our innovative power platform. Beyond bringing affordable power to consumers, our goal is to offer the resources necessary for you access the best power options in your area.

In this regard – we have scrubbed the retail energy market to provide the highest quality retail providers of natural gas and electricity at the best possible rates. Our standards are unwavering, and we remain focused on ensuring our customers are provided the best power options from the best power companies at the best prices.

In order to effectively use Energizer® Power Portal, it’s important for you to have your current energy bill ready. You will then select your state and type of power. From there, fill out a simple form about your energy usage. This information will then go through our system to match you with the best energy provider and options.

You will receive a list of carefully vetted suppliers listed by terms, length of contracts, and price. You can then select the energy provider that best suits your needs.