How Energy Deregulation Works

When you receive your monthly utility bill, whom are you paying for your electricity and gas? Do you have a choice about where you get your energy? These are questions many businesses and homeowners never even stop to consider, since the energy industry has so long been regulated. For many decades, consumers have had only one option to fulfill their energy needs: their local utility. You paid what you paid because there was no alternative and—let’s face it—it would be quite difficult to go about your daily life without power and gas.

However, the energy market is rapidly evolving, adapting to accommodate environmental concerns and consumer desires. More and more states are deregulating their energy, allowing for alternative suppliers like American Power and Gas to enter and enhance the industry. We strive to keep consumers informed so they can take charge of their energy choices. In the following blog, we break down the basics of how energy deregulation works so you can understand your utility options and better power your life.

The Origins of Regulation

When modern communities were first settling the United States, there was no infrastructure for electricity or gas. Obviously, this was a major hindrance to effective heating, lighting, and cooking. To fill this demand, forward-thinking entrepreneurs began establishing power companies. Competition was fierce—would-be tycoons battled over natural gas sources, power lines, shipping, and every aspect of delivering power.

While great for a newly booming business, this flurry of activity didn’t serve the people very well. Competing interests over infrastructure made for spotty service or outrageous pricing. To resolve this issue, the government intervened, appointing one utility company per area to control every aspect of acquiring, transmitting, and delivering fuel. Local and federal authorities also created strict standards (including pricing rules) to help make providing power as streamlined as possible. While this stabilized the field quite successfully, it also effectively created a monopoly, with individual firms administering every aspect of electricity and gas.

How Regulated Energy Works

You’re probably quite familiar with the day-to-day operation of regulated energy. When you move to a new home or establish a new business location, you most likely contact your local utility to set up your power. You probably shop around for cable providers, furniture, and everything else for your new home, but, with regulated energy, you have just one option for gas and electricity. If you want to power your home, you work with the local utility to get the energy they provide at the price point the government has set.

The Dynamics of Deregulation

It’s been a long time since the early days of energy, when reckless rivalry led to regulation. Now that the infrastructure for both electricity and gas is firmly in place, some states have decided to add competition back into the mix by deregulating energy. Deregulation doesn’t mean that the local and federal government gives up all control of power and gas. Rather, this process (also called “unbundling” or “restructuring”) opens energy supply up to competition, while keeping the current transmission and delivery systems in place.

As a consumer in a deregulated market, you’ll still receive your power and gas through your local utility’s infrastructure, but you can choose where to source your energy. You can keep your current setup in place or opt for an alternative company, so long as it is licensed and approved by the government according to specific quality, pricing, and other standards. Energy Illuminated draws a helpful parallel to explain this dynamic: “This is similar to the deregulation of the telephone industry (known as the ‘breakup of AT&T’) that took place in the 1980’s. You still have only one set of telephone poles and wires on your street, which is maintained by the telephone utility, but you can choose to sign up with whichever service provider offers the plan that suits you best.” Check out Quantum Gas’ color-coded map to check the status of energy deregulation in your state.

Thousands of home and business owners in New York, New Jersey, and Pennsylvania have made the switch from their local utility to American Power and Gas in order to save money, become more environmentally friendly through our emphasis on green fuel, and enjoy our superb customer service. By giving consumers the power of choice, deregulation motivates energy generation companies to operate more wisely and optimally.

Enjoy the Advantages of Deregulation

Deregulation is changing the energy market is changing for the better, encouraging environmental consciousness, efficiency, and superior customer relations. Contact American Power and Gas today to learn more about deregulation and to enroll in the program.

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