What is a Deregulated Market?:
In deregulated markets, the generation and sale of electricity are open to competition, with multiple companies generating electricity and selling it to suppliers. This competitive environment encourages efficiency, innovation, and better service as suppliers strive to attract and retain customers. Deregulation is determined on a state level and each commodity, gas and electric, might vary on what consumers have a choice over. For example, in Illinois, both electricity and gas are deregulated but in Michigan, gas is fully deregulated with a limited choice for electricity.
In regulated markets, prices are stable and set by public utility commissions (PUCs), protecting consumers from sudden price spikes. Deregulated markets, however, allow prices to fluctuate based on supply and demand dynamics, which can lead to lower prices during low demand periods but also higher prices during peak times. Regardless of deregulation in your state, the utility is still responsible for delivery. If you choose to select a supplier in a deregulated market, they will only charge for supply costs.
What is Energy Purchasing?:
Energy purchasing allows customers to go from being a passive energy consumer who just pays their monthly bill to an active energy consumer who uses strategic energy purchasing to save them money on their energy spend over time.
Businesses source energy from various suppliers and plans, not just the default utility rate, with the goal of securing the best rates, terms, and contract structures while managing risks like price volatility and meeting unique needs such as sustainability goals. Oftentimes businesses will seek out the help of an energy broker, like Energy CX, to assist with constructing this strategy.
How to Save Money With Your Energy Strategy:
Prices on the energy market change based on a range of factors such as supply and demand, weather conditions, geopolitical issues and regulatory changes. Evaluating the market is one way businesses can save money. Energy rates are always changing, by monitoring the market and identifying the optimal time to buy, businesses can lock in rates when prices are favorable.
Furthermore, assessing your risk appetite can also save you money. Looking into fixed-price contracts, block-and-index pricing, and other flexible options can help you save on the bottom line and mitigate the risks associated with price volatility.
Bottom Line:
Deregulated markets offer consumers options when crafting their energy strategy. Working with a broker can help businesses determine the best game plan to help reduce energy costs. Not sure where to start with your energy strategy? Let our experts do the heavy lifting, book a meeting with us today!