Understanding Electricy Energy Deregulation

What is Energy Deregulation?

In the mid-1990s energy deregulation in New York started when the state government began to implement policies to restructure the electricity industry. They believed that this deregulation would help businesses and consumers save money on their electric bills.

The deregulation process had been ongoing in the natural gas industry for years, but little had been done with electrical deregulation in New York until much later, since they are much more complex in terms of operations, rate policies and distribution. As a result of this, experts believe that electric utility restructuring will have a far greater impact on electricity rates charged to consumers and the manner in which operations are handled in the coming years.

Utility & ESCO's

A utility company provides a tangible commodity or service that is considered to be something vital to the well-being of the general public. These commodities include things like electricity, water, or natural gas. The utility is responsible for producing the commodity, transporting it (in the case of electricity through the power lines they erect and maintain), and ultimately, distributing it to the individual consumer through a meter and connections to the power grid.

It was determined by both state and federal lawmakers that it is in the public’s best interest to regulate how electricity is provided. To keep utilities from practicing price gouging like often happened in the early years the utilities were being built and to encourage widespread access by individual consumers, the government originally allowed individual utilities certain monopolistic rights to sell energy unchallenged within a specific territorial area, known in the industry as the “service area” or “franchise territory.” In the times when the utility was first being set up, this monopoly allowed the utility to regulate prices any way they saw fit as well as enacting service terms and conditions that the consumer had no choice but to abide by if they wanted power.

Energy Supply Companies

Deregulation in New York state allows the consumer to choose who they receive their energy supplier from. Energy supply companies can charge rates lower than those set by the utility company. New York is one of only 19+ states which is implementing restructuring to a competitive market.Type your paragraph here.

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