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Energy Deregulation: A Progress Report and Look Ahead

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When power markets in the United States first opened to retail energy suppliers, the immediate result was increased competition. With more competitive markets, the energy industry intended to achieve three goals:

  1. Give consumers more buying options
  2. Create competitive pricing so consumers save on their bills
  3. Encourage innovation, resulting in unique energy offerings

So what progress has been made toward achieving those goals?

Watch as Jim Connolly, Vice President of Sales at Direct Energy Business, presents a snapshot of today’s deregulated energy markets and the opportunities and challenges ahead.

Keynote filmed in Chicago at the conference for The Energy Professionals Association (TEPA) and the Illinois Energy Professionals Association (ILEPA) on July 9, 2019.

Current Benefits

Increased competition in deregulated states has resulted in more energy options and cost savings for consumers, as well as greater incentives for suppliers to bring unique products and services to market. Here are the results Connolly finds most beneficial to consumers:

  • Deregulation has led to greater energy choice. In North America alone, there are more than 200 energy suppliers offering even more strategic purchasing and demand management options to meet consumer needs.
  • Businesses are saving more money on their electricity bills. According to research from Direct Energy Business, commercial and industrial consumers in open markets such as Ohio, Pennsylvania and New England achieved energy savings in the billions between 2011 and 2016.
  • Innovation is transforming how consumers buy energy. For example, consumers can buy commodities at fixed, layered-fixed or index prices, shop around for renewable energy and even earn reward points on their purchases.

Future Opportunities and Challenges

Today’s consumers expect energy to be affordable, reliable and sustainable. In increasingly competitive energy markets, those expectations are rising higher and higher. Affordability and sustainability are no longer mutually exclusive. As renewable energy prices continue to fall, consumers are looking for suppliers offering unique renewable options. The meaning of reliability is changing, too. Supplier reliability is no longer measured by credit rating alone. Consumers want financially strong suppliers who can also help protect their facilities against grid outages and optimize their sustainability goals.

With ever rising consumer expectations, suppliers have evolved to think beyond the price per kilowatt hour. The result is a surge in innovation, which will continue to reshape the energy industry for years to come. According to Connolly, the future presents an opportunity for suppliers to look holistically at consumers’ energy usage, bundling financing, monitoring, risk assessment and procurement to deliver a total energy management strategy.

The future of the energy industry is bright but not without risk. The regulatory environment in the United States is changing rapidly, presenting new challenges for suppliers and consumers alike. One such challenge is nuclear bailout. In New York and other states where bailout is already under way, consumers are paying the price at millions of dollars per year. Still other states, including Ohio, are facing pressure to implement some form of bailout. Despite these and other costs, some legislatures are narrowing their view on deregulation, making it more difficult for consumers and suppliers to enter into mutually beneficial agreements.

So far, the energy industry has made great strides in achieving the goals of deregulation. To ensure this progress continues, state legislatures and energy suppliers must both do their part. For state legislatures, this means pursuing agendas that incent renewables while at the same time promoting competition. In response, energy suppliers must continue to innovate, adapting their products and services to consumers’ ever-changing needs.

Ultimately, if everyone does their part, deregulation will benefit consumers well into the future, enabling them to save on their electricity bills and reinvest their savings into the economy.

What trends are driving the rise of renewable energy? Learn more

 

Posted: September 06, 2019

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