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Energy Deregulation: What does this mean to you?

What is Energy Deregulation?

It has been a popular subject lately, especially since some states recently removed the caps for the electrical companies. I'll just give it to you straight, which I think you'll appreciate.

Your electricity company, whether it is PECO, PPL, BGE, PEPCO, etc - does not generate energy. Crazy, isn't it? Your electricity company doesn't produce electricity. They buy it from a distributor and then they re-sell it to you. What REGULATION does is that it sets a price per KWH that the companies have to sell it to you for. This helps the electric companies to make a killing when they buy it cheap, but they make much less money when the price increases. Your energy distribution provider is, and will continue to be, provided to you by the company who owns the power lines and transformers that go to your house. That is something that does not change with energy deregulation.

Energy Deregulation, otherwise known as "Breaking up energy monopolies" or "restructuring the system" or "giving people choices", is going to be available to everyone across the US by the year 2015 due to the recent law passed by Congress. I know what you're thinking, "Congress did something???" It has been known to happen from time to time, and this one actually helps the people instead of hurting them. So, with deregulation, you can choose to shop around for electricity to find a lower rate, or you can settle for whoever your distributor chooses for you. If you let them choose for you, that's like taking your voter registration and passing it along to a stranger on the street and saying, "Vote for whoever you want, no matter what it costs me."

And on that note, did you know that you pay three times for every KWH that you use? I'll wait while you pull out your electricity bill...

Distribution, Transmission and Generation are the three charges that just about every electricity company uses to justify making you pay more. Distribution charges usually include the local lines, transformers, substations, services and anything else that the company maintains so that you have continued service. Those charges vary by company, and unless someone else buys and maintains the hardware that brings your electrical service to your house, you're pretty much stuck with what you've got. Transmission charges include the cost of moving high voltage electricity from the electrical generation facility to and through the electricity company's power lines. Generation charges are from the actual production of electricity, which you may notice varies significantly from bill to bill.

So, getting back to the topic at hand, with regulation you could get screwed, and with deregulation you could get screwed, but you are more likely to pay more through your electricity company than through another provider - especially if they serve multiple states.

So, what do you do about it?

The electric company hopes you'll do nothing. And hey, you could do nothing and maybe you won't mind the constant fluctuating electric bills. You could install solar panels or wind turbines, which of course I would love to do, I just can't afford it right now (especially since I'm paying so much in electric bills right now). You could stop using electricity. It works for some people - the Amish don't use electricity and they seems to get along just fine. If that's not the lifestyle you prefer, then you're better off finding a way around this.

One way to reduce your electric bills is to replace your light switches with dimmers. There are many companies out there that make dimmers (sometimes referred to as "dimmer switches" but actually a dimmer and a switch are two different devices). You could dim your lights 20% without noticing a difference in light level. Dimming just 10% will reduce your energy consumption by 10% and will increase your bulb life by 2. So, those light bulbs that are rated for 5,000 hours are now going to last 10,000 hours. Cha-ching!! Now get this - if you dim 20%, which is the lowest light level you can go before anyone notices, you will double your bulb life again, and save another 10% on your energy bills. Your bulbs will now last 20,000 hours.

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Now, I must tell you that most people make a common mistake. They believe that using CFLs (Compact Fluorescent Lamp) they can save electricity while saving the earth and they can still dim their lights. I wish I could tell you that this is true, but it's far from it. Yes, these bulbs can save energy, but the harm that they do for the earth is much worse than that little bit of energy that they save. Also, if you buy the cheap ones that come in a 6-pack for $5, they will last about 6 months if you use them once a day, and they can not be safely recycled. You're better off buying Halogens or Incandescents for $2 for the 6-pack and dimming them a little bit. Plus, the dimmers for these bulbs are much less expensive than the ones for CFLs, and they are much more universal. You need to buy a dimmable CFL in order to use it with a CFL dimmer. The dimmable CFL can easily cost you $20 per bulb, and they really don't last much longer than the ones in the 6-pack. Feel free to try it if you like - you may want to have the brightest lights possible for the least energy cost. It's just my opinion that it's not worth the investment.

There are plenty of other ways to reduce your energy consumption, and your electric company most likely has a lot of this information for you. After all, they are not as evil as we all would like to believe that they are. Of course, you could also sign yourself up for deregulation. Right now, if you live in Pennsylvania, New Jersey, Maryland, George or Texas, you can sign up for energy deregulation through Stream Energy.

Become part of the solution - and make money doing it!

You could become a leader in the energy deregulation community if you live in any of these states:

  • Pennsylvania
  • New Jersey
  • Maryland
  • Georgia
  • Texas

Several more states will be rolled out in the next year, so if you live in the North-East US, keep checking back to see if your state has become deregulated.

Good luck!


Chris on July 24, 2013:

What law states this 2015 deadline?

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