The history of energy deregulation is complex and interesting. When local and federal governmental bodies decided to break up utility monopolies, it gave opportunities to new energy retailers and wholesalers. In states where electricity or natural gas is deregulated, consumers have the choice to purchase their energy supply from a third-party, retail energy provider.
Consumers might elect to purchase from a supplier for a variety of reasons:
- They can secure a lower rate from a supplier to save money
- They can lock in a long-term rate for price stability
- They can purchase hybrid electric or gas products that meet their individual needs
If and when consumers or businesses decide to purchase their energy supply from a retail provider, the other components of their utility bill remain the same. In fact, in most states, local utility companies are still in charge of billing and managing utility lines, despite the fact that customers have supplier choice. In deregulated states, retail suppliers simply purchase electricity or natural gas from the wholesale market and resell it to end users in the retail market. The setup looks something like this: