How Electricity Deregulation Can Benefit Small Businesses

Small businesses spend about $60 billion on energy each year. Given the size of that expenditure, it’s important that small businesses have opportunities to save on their energy use.

Deregulation – which allows retail energy providers to compete to offer competitive electricity rates – gives businesses the opportunity to control energy costs by choosing their supplier instead of staying with a local utility.

In competitive electricity markets, traditional utilities own and operate the way electricity is transmitted and distributed to homes, businesses, and factories. The transmission wires that deliver electricity are owned by the local utility company, and transmission and distribution charges are set by regulators. They also conduct monthly electric meter reads, take care of billing in some service territories (specifically not in Texas), and handle emergency situations, such as power outages.

Retail energy providers – which includes Direct Energy Business – vie to supply power to homes and businesses in competitive electricity markets. Direct Energy Business can provide a number of benefits to small businesses including competitive pricing options that more closely reflect the current market, improved customer service, and cutting-edge product offerings. For small businesses, there are two main types of energy purchasing plans offered by suppliers to help small businesses better customize supply purchases: fixed pricing and variable pricing. 

Fixed price products offer a set price for your electricity supply for the length of your contract term, regardless of electricity prices. This plan is especially beneficial if you believe rates will increase during the duration of your contract. 

Conversely, variable rate products allow your electric rate to change from month to month based on market fluctuations. If you believe electricity prices will drop or fluctuate during your contract period, then a fixed rate plan may be your best option. 

How can small businesses identify the most strategic pricing offer for them? By soliciting at least three supplier bids, directly comparing the prices of the aforementioned components, and requesting different price configurations to examine your options. The best option will be a financially stable supplier that can meet billing, service, and price requirements.

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To learn about our pricing options for small businesses, please visit our Small Business page. For more information on how electricity deregulation, check out “The Dollars and Sense of Deregulation” infographic.