In the early 1990’s, the Federal Energy Regulatory Commission (FERC) introduced wholesale market competition to the electricity sector. In the late 1990’s, many state states in an effort to reign in the cost inefficiencies and cost overruns of a monopoly system, restructured their electricity markets and introduced deregulation to the retail markets to encourage competition and the innovation it engenders.
At first, the large energy users were the first to embrace electricity competition. As the competitive market has matured, nearly all-commercial businesses are sought after as deregulated energy customers. Competition has driven suppliers to pursue residential customers in such states as Connecticut, Maryland, Pennsylvania, New Jersey and Texas.
Deregulation encourages innovation in the generation and marketing of electrical energy and the mining, storage, and interstate transportation of natural gas; and all energy markets are driven to maintain dependable supply of energy related products to a diverse customer base.
Your local utility is regulated and their responsibility is to maintain the physical infrastructure to deliver electricity or natural gas to their customers after the city gate or distribution connection. The local utility is the Default or Basic service provider.
Each state adopts its own deregulation law and administers those laws through its own Department of Public Utilities (DPU).
How Does It Work
When you switch to a Competitive Supplier, the electricity or natural gas is provided to you under a separate contract with no disruption in service. Any changes that take place are made on the meter read date.
The local utility will bill you for their cost, overhead and regulated profit for the use of their physical infrastructure to deliver electricity and natural gas to you. There will also be regulated non-energy charges such as distribution, transition stranded cost, renewable energy and energy conservation cost will be invoiced through the generation Supplier.
Typically, the customer will receive two bills, one from the Competitive Supplier and one from the regulated utility. In some states, the customer may choose to have both the Competitive Supplier and the regulated utility invoiced on one (1) Utility Company invoice.