Electricity provider switching

Electricity provider switching

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.

United States

In deregulated power markets such as Texas, the state government may require the dictates the incumbent utility energy provider to stand-downand allow for unlimited competition within the marketplace, whereby the consumer is 'free to choose any electricity provider desired and switch over to said company.

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 practicle if a customer is either buying from a utility, or is at the end of a fixed price contract with a provider. Price comparison can be done on a price comparison service called Energyshop.com.

The status of Texas electrical deregulation: Six years later

The primary claim of pro-deregulation supporters was one of [http://www.texasobserver.org/article.php?aid=2243 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. 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).

Using the Austin rate of 10 cents per kilowatt as a model of still-regulated pricing, the citizens of Texas in deregulated markets pay a premium of 29% above what would be their likely rate had Texas never experimented with deregulation. Regarding the expectation of lower rates, deregulation has been a [http://www.texasobserver.org/article.php?aid=2243 failure.] And it should be pointed out that this same failed result has repeated itself in every application of residential electrical deregulation in America since the movement started in the 1990s. In fact, many states are now putting their plan to deregulate [http://austin.bizjournals.com/austin/othercities/pittsburgh/stories/2006/07/03/story3.html on hold] because lower rates have yet to be achieved in any of the deregulated states.

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 [http://www.citizen.org/pressroom/release.cfm?ID=2131 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, [http://www.salsa.net/node/449/ Texas surpassed California] in wind energy production in July of 2006. As such, the environmental impact deregulation has been a mixture of both good and bad.

However, if energy efficiency is the test for success, then deregulation has been a success. As electric bills have quickly ballooned due to [http://www.texasobserver.org/article.php?aid=2243 skyrocketing 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. With respect to energy-use efficiency, deregulation has been a success.

United Kingdom

Electricity supply has also been deregulated in the United Kingdom. For a list of suppliers see: "Category:Power companies of the United Kingdom" at the foot of the page.


Electricity is deregulated in 2 Canadian provinces; Ontario 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 [http://www.energy.gov.on.ca/index.cfm?fuseaction=english.electricity 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.

See also

*Deregulation of the Texas electricity market
*Electricity market

External links

* [http://www.dallasnews.com/sharedcontent/dws/bus/stories/080703dnbizenergysourceguide.105fb05b7.html "Guide to Choosing an Electricity Provider" from the "Dallas Morning News"]
* [http://www.electricitytexas.com "Side by Side" Electricity Rate Comparisons for Switchers]
* [http://www.texasobserver.org/article.php?aid=2243 "OverRated: A detailed look at the skyrocketing rates in Texas"]
* [http://www.knowledgeproblem.com/archives/001269.html "A Misguided Criticism of Texas Electricity Deregulation", by Lynne Kiesling]
* [http://www.epsa.org/Competition/benefits.cfm EPSA Memo on the Benefits of Competition]
* [http://www.powertochoose.com Texas "Power To Choose" informational website]
* [http://www.multiut.com/article.htm "About Energy Deregulation", by Multiut Corporation, Nachshon Draiman CEO]

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