In a deregulated electricity market, power plants and transmission lines are owned by market participants other than utility companies in a deregulated energy market. In these situations, electricity is sold into a wholesale market by generators (businesses that produce electricity), and retail energy suppliers buy the electricity to resell to consumers.

This gives customers the freedom to select their energy supplier. Competition brought about by deregulation can result in reduced costs, increased efficiency, greater flexibility for self-generating power producers, more renewable energy sources available, and green pricing schemes.

Some states have only deregulated specific consumers or regions, or they have deregulated natural gas but not electricity, or vice versa. At the time of writing, about 40% of US states have deregulated electricity options.

Here are the varying levels of deregulation: 

  • Fully Retail Electricity, Full Retail Natural Gas
  • Fully Retail Electricity, Limited Retail Natural Gas
  • Limited Retail Electricity, Full Retail Natural Gas
  • Limited Retail Electricity, Limited Retail Natural Gas
  • No Options Retail Electricity, Full Retail Natural Gas
  • No Options Retail Electricity, Limited Retail Natural Gas

The utility companies distribute, run, and maintain the energy supply, and they charge ratepayers for these services.

The Main Benefit Of Deregulation

The main benefit of deregulation is that it gives consumers the freedom to move to a different energy supplier if they’re dissatisfied with their current one. Competition naturally pushes businesses to provide better plans, prices, and overall customer experiences in order to draw in and keep customers, just like in any other industry.

Deregulated Natural Gas Markets

Nearly half of the US states have implemented retail energy choice and energy deregulation to some extent for homes and businesses within their borders as of March 2024. A deregulated natural gas market is in place in about twenty states, including Georgia, Massachusetts, and Illinois. Similar to electricity, deregulated natural gas markets are those in which no single utility controls or monopolizes the buying or selling of natural gas. In order to foster competition and, ideally, reduce the cost of natural gas rates for local businesses and households, suppliers are permitted to enter the market.

Deregulation FAQ’s

  • What constitutes the majority of a business’s electricity bill? Electricity rates vary depending on a variety of factors, including location, business type, and amount of electricity used.
  • What determines how much a business pays for electricity? The kWh (kilowatt-hour) rate (i.e., electric rate) that a business pays for electricity varies depending on a number of factors such as the location of the business, the type of business, the amount of electricity used, and when electricity is used.
  • Which types of companies consume the most energy? The term “commercial” building refers to a wide range of structures serving various purposes. The top five types of commercial buildings account for slightly less than two-thirds of total commercial building energy consumption. Retail and service buildings use the most energy of any commercial building type, accounting for 20% of total energy consumption. Office buildings account for 17% of total consumption, followed by education (13%), health care (9%), and lodging (8%).
  • What electric plans do providers generally offer? There are two major categories of business electricity plans: Fixed-rate plans provide an electric rate that is fixed (“locked in”) for a specific period of time (a term), regardless of the wholesale price of electricity. Common terms for such agreements include six months, twelve months, and twenty-four months. Variable-rate plans are more suitable for longer terms. These rates fluctuate according to the wholesale price of electricity. Businesses that choose variable rates may be able to save money if the wholesale price of electricity falls. They can expect higher rates (and, in some cases, much higher) if the wholesale price of electricity rises.

What Are The Energy Choice Programs?

Energy deregulated states typically offer energy choice programs or energy choice organizations (such as Electric Choice) that assist businesses in finding an energy supplier. It is critical to find the best energy supplier for your business because they can save you money, time, and other resources in the long run.

US Deregulated Electricity Markets Revo DCS
This Map Is Evolving Daily, Contact Us For Updates

Another Way To Think Of It: Airline Companies

Airlines generally buy their own fuel in bulk and pay a fueling company to store it, pump it and do all the maintenance needed. In other words, they negotiate deep discounted wholesale prices and lock in hte rates before they go up. Basically, they are not paying a fluctuating retail price, more so a “deregulated” wholesale price so to speak.

Electricity Demand and Costs: A Case Study

Texas Energy Demand Revo DCS
Texas Energy Demand
Texas Energy Prices Revo DCS
Texas Energy Costs

Texas Energy Overview

Texas leads the nation in energy production, accounting for roughly one-fourth of all domestically produced primary energy. Texas is second only to Alaska in total land area, accounting for 7% of the country’s total area and stretching approximately 800 miles east to west and north to south at its widest points.

Much of the area contains crude oil and natural gas fields. Coal can be found in bands across the eastern Texas coastal plain, as well as in the state’s north-central and southwestern regions. Furthermore, Texas has an abundance of renewable energy resources and ranks first in the nation for wind-generated electricity.

Texas is one of the leading states in solar energy potential and generation, thanks to a large number of sunny days over long distances. Eastern and southern Texas also have geothermal resources that can be used to generate electricity. Uranium, the fuel for nuclear reactors, was first mined in 1961 from sandstone deposits in the Texas coastal plain, and there are still significant resources available.

A project to mine rare earth elements and other critical minerals is currently under development in southwest Texas. These minerals are used in numerous energy-related technologies and are regarded as critical to the United States’ economic and national security.

The Texas Electricity Market

Texas generates more electricity than any other state, more than doubling that of Florida, which comes in second. In 2023, Texas was responsible for 13% of the nation’s total electricity net generation.

Natural gas-fired power plants generated more than half of Texas’s electricity. Texas generates more electricity from natural gas than any other state, accounting for 15% of total natural gas-fired generation in the United States. Wind is Texas’ second-largest source of in-state generation.

In 2023, wind generated 22% of Texas’s total in-state utility-scale (1 megawatt or larger) and small-scale (less than 1 megawatt) generation, surpassing coal for the fourth year running. Because of an increase in wind power and the retirement of 7,400 megawatts of coal-fired generating capacity in Texas over the last decade, coal-fired power plants will supply 13% of the state’s total generation in 2023, down from 34% in 2013. In 2023, the state’s two operating nuclear power plants accounted for approximately 7% of total electricity net generation. Solar energy accounted for the vast majority of the state’s remaining total generation.

Without deregulation we are stuck with “regulated” markets. This means that there is no competition, and you pay your local utility directly for the electricity/gas they provide, regardless of the (high) cost.

Deregulation has had positive effects on energy markets, including lower prices, driving innovation, improving customer service, increased energy efficiency, and investments in sustainable energy.

Want to learn if you can purchase deregulated energy?

Book An Appointment

Electricity Rates by State 

The rate per killowatt-hour (kWh) that a home or business pays for electricity are determined by a variety of factors, including (but not limited to) service address location, building type (residential/commercial), usage, general market conditions, and market disruptions (wars, weather, etc.).

At the time of writing, these are the average electricity rates. The actual electricity rate charged by your local energy provider may be higher or lower than the rate listed for your state.

  • Average electricity rate – 16.54 cents per kWh.
  • Lowest electricity rate: 11.23 cents per kWh (Louisiana).
  • Hawaii has the highest electricity rate (40.2 cents per kWh).

Okay, I Get It, What Is An Audit?

In a similar fashion to how we do telecom audits (where we analyze your phone bills and technology spending), we can review your utility bills and look for savings and better options.

We find that this is easiest way to explain it since it’s more common. The telecom industry itself was deregulated back 1996. Had it not been for that, we would all potentially still be stuck with copper phone lines and dial up internet access.

One of the major goals of telecom deregulation was to increase competition within the telecommunications industry and allow more telecom companies to exist other than just the incumbents (AT&T for example).

Just like what we think utilities deregulation is going to do, telecom deregulation encouraged the expansion of networks and the introduction of many new services. This further evolved into technologies such as SIP (Session Initation Protocol), VoIP (Voice over Internet Protocol), and more.

What Is A Telecom Audit

A telecom audit is an empowering tool used by businesses and is often conducted annually.

We analyze current business communication and technology systems and expenses.

We look for savings, infrastructure needs, upcoming changes, and more to enables businesses to streamline their operations, save money, and more. Book An Appointment.

The Importance Of Regular Audits

When you think of business technology management, how frequently should innovative companies conduct telecom audits?

How else would you know about new technology options and cost saving solutions?

A general guideline is to perform a thorough telecom audit at least once annually. This practice guarantees that your communications and technology is not only modern, but is potentially cheaper overall.

Leveraging Audits for Advancement

Telecom, technology and utility audits serve as more than just routine evaluations; they act as a driving force for change.

Each audit presents a chance to enhance, streamline, and possibly transform your current infrastructure.

As you navigate through adapting to major changes in your operational requirements, performing an audit can advance your organization, helping to eliminate redundancies and adopt innovative solutions.

Are your existing solutions contributing to your success, or are they merely preserving the current state?

Audits Help With Liability and Compliance Issues

Frequent audits serve as a beacon for cost-efficiency and quality assurance. However, in the world where things change quickly and obsolescence is the only constant, remaining tethered to outdated technologies is not just imprudent – it’s a liability.

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At Minimum, An Audit Can Correct Billing Errors

For simplicity, let’s continue focusing on telecom audits. Did you know that 80% of telecom invoices contain billing errors? In addition, over 95% of invoices have unnecessary or incorrectly priced services.

The savings gained from the audit process often outweigh the associated costs. Book An Appointment to get started.

By identifying and resolving these issues, businesses can optimize their telecom, technology, utility expenses (and more) to improve their bottom line.

How much money could your business potentially put back in the budget?

We May Be Able To Save You Up To 30% Today

In addition to cost savings, there is also need for vigilance in monitoring your business technology lifecycle. Vital systems approaching their End Of Life can hurt the security of your entire business.
Inquire About An Audit Or To Learn More

Benefits Of A Comprehensive Audit

Audits are invaluable in determining your exact assets and needs. Most bills do not clearly outline this information. To name a few items, audits can:

  1. Comprehensive review of every line item on your invoices.
  2. Thorough comparison of charges to contract and billing taxes and tariffs.
  3. Identification of billing errors or mistakes.
  4. Identification of under-utilized or unused services.
  5. Identification of possible credits or refunds due from your current providers.
  6. An exhaustive inventory of all lines, circuits, devices, features and functionality across your entire business.
  7. Understanding of existing contracts, including commitments and expiration dates.
  8. Development of a formal strategy.
  9. Implementation of new contracts to ensure fair terms and conditions.
  10. Creation of a blueprint for future vendor accountability reviews to proactively manage services.
  11. Ensuring accurate price points and correct billing for ongoing accuracy.
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Transition to Modern Business Solutions

Embracing modern solutions can position your business as a dynamic leader in a tech-dominated world.

As a Revo DCS customer, you have access to all the solutions you need to spring board your company into efficiency, collaboration, and cost-effectiveness.

In an ecosystem where technological endurance is tantamount to commercial success, the question then is not if, but when will you take action to ensure that your systems are not merely just surviving, but thriving?

Revo DCS Disruptive Communications Solutions for Business

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