Electricity Provider Switching
Encyclopedia
Electricity provider switching is the ability of power consumers to have an option—or the "power to choose" -- their electricity
provider in a deregulated
electricity market as permitted by a state public utilities governing body.
and Alberta
. Both markets showed price spikes in the first year of dereguation, but then settled down into a volatile but reasonably stable environment. Alberta's market is dominated by fossil fuel generation and as such reacts more closely to the price of natural gas. Ontario's generation mix is about 50% nuclear.
Electricity provider switching is difficult unless the customer is buying from the utility or is at the end of a fixed price contract. There is a price comparison service
operation in Canada.
. For a list of suppliers see: Category:Power companies of the United Kingdom at the foot of the page.
and Maryland
, the state government may require the incumbent utility energy provider to allow for unlimited competition within the marketplace, where the consumer is free to choose any electricity provider.
Currently, roughly a dozen of the lower 48 contiguous United States
allow for consumer choice in electricity providers, with Texas
being the most-widely watched deregulatory scheme. Many other states are surveying the Texas deregulatory model
in order to ape its design as a paradigm for the imposition of free market forces within such other power markets.
Electricity provider switching is only practical if a customer is either buying from a utility, or is at the end of a fixed price contract with a provider. Switching electric providers in Dallas and other places in Texas depends on several variables that should be considered carefully by consumers.
If environmental impact is the test for success, then the results are a mixture of good and bad. Flush with profits from the 29% premium being charged to Texas residents in deregulated markets, producers like TXU proposed eleven new coal-fired powerplants which, compared to natural gas-fired powerplants, produce more pollution and higher profits (coal is cheaper than natural gas on a per-produced-kilowatt basis). This effort was supported by Texas Governor Rick Perry
who put the proposed plants on a "fast track" process for permits in an effort to be grandfathered in under more lenient EPA pollution rules. Because the Dallas/Fort Worth region already has such a serious smog problem, many public organizations, such as the Environmental Defense Fund, and politicians objected this plan. In a notable moment for climate change activists, TXU withdrew its proposals for eight of the eleven plants on February 25, 2007. This was also a result of Texas Pacific Group and Kohlberg Kravis Roberts & Co's acquisition of TXU Corp. On a renewable note, the ballooning profits from Texas electrical providers has drawn considerable investment by wind-turbine companies. In fact, Texas surpassed California in wind energy production in July 2006.
As electric bills have quickly ballooned due to rising rates, residents are proactively trying to reduce their electrical usage by raising the thermostat setting, installing insulation, installing solar screens, and other such activities. So as with all utilities, usage decreases as the prices rapidly elevate as they have in Texas since deregulation set in.
Electricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...
provider in a deregulated
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
electricity market as permitted by a state public utilities governing body.
Australia
The Australian market has been somewhat deregulated, but still sees consumers provided with a narrow band of choices. Due to these deregulations, companies are springing up to help consumers find the best priced electricity, which given it is a commodity has allowed for downward pressure on pricing and a more affordable quality of life for the average Australian.Canada
Electricity is deregulated in 2 Canadian provinces; OntarioOntario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
and Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
. Both markets showed price spikes in the first year of dereguation, but then settled down into a volatile but reasonably stable environment. Alberta's market is dominated by fossil fuel generation and as such reacts more closely to the price of natural gas. Ontario's generation mix is about 50% nuclear.
Electricity provider switching is difficult unless the customer is buying from the utility or is at the end of a fixed price contract. There is a price comparison service
Price comparison service
On the internet, a price comparison service allows individuals to see different lists of prices for specific products. Most price comparison services do not sell products themselves, but source prices from retailers from whom users can buy...
operation in Canada.
United Kingdom
Electricity supply has also been deregulated in the United KingdomUnited Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. For a list of suppliers see: Category:Power companies of the United Kingdom at the foot of the page.
United States
In deregulated markets such as TexasDeregulation of the Texas Electricity Market
Electricity deregulation in Texas was the result of the coming into force of Texas Senate Bill 7 on January 1, 2002. According to the law, deregulation is to be phased in over several years....
and Maryland
Maryland Electric Deregulation
Maryland Electric Deregulation is the result of a bill passed in 1999 by the Maryland General Assembly. This bill changed the entire face of the Maryland utility industry.The past several years have seen a flurry of changes in the energy industry in Maryland...
, the state government may require the incumbent utility energy provider to allow for unlimited competition within the marketplace, where the consumer is free to choose any electricity provider.
Currently, roughly a dozen of the lower 48 contiguous United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
allow for consumer choice in electricity providers, with Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
being the most-widely watched deregulatory scheme. Many other states are surveying the Texas deregulatory model
Deregulation of the Texas Electricity Market
Electricity deregulation in Texas was the result of the coming into force of Texas Senate Bill 7 on January 1, 2002. According to the law, deregulation is to be phased in over several years....
in order to ape its design as a paradigm for the imposition of free market forces within such other power markets.
Electricity provider switching is only practical if a customer is either buying from a utility, or is at the end of a fixed price contract with a provider. Switching electric providers in Dallas and other places in Texas depends on several variables that should be considered carefully by consumers.
The status of Texas electrical deregulation: Six years later
The primary claim of deregulation supporters was one of lower electric rates. Since electrical deregulation was implemented in Texas in 2002, the residential rate for electricity has been increased seven times, leaving the current Price To Beat at around 15 cents per kilowatt (as of July 26, 2006, www.powertochoose.org). The average American rate is about 9.78 cents per kilowatt, similar to that of the few regions in Texas which chose not to deregulate; for example, Austin residents only pay 10 cents per kilowatt hour. However, it is often meaningless and can be misleading to compare electric rates across different regions to judge the success of electric choice, as a number of factors can affect the pricing a electricity in a region that have nothing to do with competition, including the electric generation mix that serves the region, environmental regulations and the cost of fuel. While it is true that residents of some Texas regions have access to over a dozen different competitors, those competitors offer only a small discount from the Price To Beat; for example, the lowest cost provider in North-Central Texas charges 12.9 cents per kilowatt (as of July 26, 2006, www.powertochoose.org).If environmental impact is the test for success, then the results are a mixture of good and bad. Flush with profits from the 29% premium being charged to Texas residents in deregulated markets, producers like TXU proposed eleven new coal-fired powerplants which, compared to natural gas-fired powerplants, produce more pollution and higher profits (coal is cheaper than natural gas on a per-produced-kilowatt basis). This effort was supported by Texas Governor Rick Perry
Rick Perry
James Richard "Rick" Perry is the 47th and current Governor of Texas. A Republican, Perry was elected Lieutenant Governor of Texas in 1998 and assumed the governorship in December 2000 when then-governor George W. Bush resigned to become President of the United States. Perry was elected to full...
who put the proposed plants on a "fast track" process for permits in an effort to be grandfathered in under more lenient EPA pollution rules. Because the Dallas/Fort Worth region already has such a serious smog problem, many public organizations, such as the Environmental Defense Fund, and politicians objected this plan. In a notable moment for climate change activists, TXU withdrew its proposals for eight of the eleven plants on February 25, 2007. This was also a result of Texas Pacific Group and Kohlberg Kravis Roberts & Co's acquisition of TXU Corp. On a renewable note, the ballooning profits from Texas electrical providers has drawn considerable investment by wind-turbine companies. In fact, Texas surpassed California in wind energy production in July 2006.
As electric bills have quickly ballooned due to rising rates, residents are proactively trying to reduce their electrical usage by raising the thermostat setting, installing insulation, installing solar screens, and other such activities. So as with all utilities, usage decreases as the prices rapidly elevate as they have in Texas since deregulation set in.
See also
- DeregulationDeregulationDeregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
- Deregulation of the Texas electricity marketDeregulation of the Texas Electricity MarketElectricity deregulation in Texas was the result of the coming into force of Texas Senate Bill 7 on January 1, 2002. According to the law, deregulation is to be phased in over several years....
- Electricity marketElectricity marketIn economic terms, electricity is a commodity capable of being bought, sold and traded. An electricity market is a system for effecting purchases, through bids to buy; sales, through offers to sell; and short-term trades, generally in the form of financial or obligation swaps. Bids and offers use...