Since the late 1990s, businesses in deregulated states have had the option to choose their electricity Supplier. By making informed decisions with the guidance of an energy advisor, millions of end-users have gained control over costs and budget predictability through using third-party Suppliers. In this blog, we will cover the basics of what third-party electricity is and how an energy advisor can help guide you through the decision-making process.
What is a Retail Electric Provider (REP)?
Retail Electric/Energy Providers (REP) or commonly called Suppliers, are companies that provide electricity to consumers by purchasing power on the open market and selling it at competitive rates. Unlike traditional utility companies whose primary function is grid reliability, distribution and maintenance, REPs focus on procuring electric supply for end consumers at the residential, commercial, and industrial level. By way of analogy, if utilities maintain the trucks and roads REPs manage the packages delivered to the client.
What States Have a Deregulated Electricity Market?
According to the US Environmental Protection Agency, the following states currently have deregulated electricity markets:
- California
- Connecticut
- Delaware
- Illinois
- Maine
- Maryland
- Massachusetts
- New Hampshire
- New Jersey
- New York
- Ohio
- Pennsylvania
- Texas
- Virginia
Benefits of Using Third-Party
Potential Cost Savings
Through deregulation, competition in the energy markets has resulted in REPs often offering lower rates than your local utility. According to a report done by Supplier NRG, “if all electric customers in Massachusetts had chosen the lowest-cost competitive Supplier in 2022 and 2023, the potential savings would have been approximately $1.7 billion over the two years, compared to basic utility service.”
Variety of Plans and Services
Suppliers provide a range of products such as fixed rates, floating rates, or layered hedge approaches. Each product is beneficial for different business needs, so working with an energy advisor can help you choose the product that aligns with your business goals. Unsure of which product suits your business best? Refer to our blog Empower Your Business: A Guide to Choosing the Right Third-Party Electricity Supply Product.
How Can an Energy Advisor Help?
Partnering with an experienced energy advisor like Atlas Retail Energy (ARE) can streamline the process of selecting and managing your third-party electricity contract. Advisors bring market expertise and industry insights to the table, which can significantly benefit your business in the following ways:
Tailored Market Intelligence
An energy advisor can analyze current market trends, historical price movements, and forecast future rates, allowing businesses to lock in contracts at optimal times. This can be especially valuable in volatile markets where timing plays a crucial role in cost savings.
Customized Solutions
Advisors assess your business’s energy consumption patterns, budget requirements, and risk tolerance to recommend customized products that align with your operational needs. They will help you weigh the pros and cons of fixed vs. floating rates and evaluate the value of layered hedging strategies.
Ongoing Support
Beyond the initial contract, energy advisors offer ongoing support, monitoring market conditions and notifying you of opportunities to renegotiate or switch Suppliers. They can also assist with managing contract renewals and ensuring compliance with state-specific regulations.
Risk Management
In a deregulated market, understanding price risks and planning accordingly is key to long-term savings. An advisor can help identify and mitigate risks, ensuring you are protected from unexpected price hikes or unfavorable contract terms.
Conclusion
Deregulated electricity markets offer businesses the freedom to choose their Supplier and potentially save significantly on energy costs. However, navigating the complexities of third-party electricity contracts can be daunting without the right knowledge and support. By working with a skilled energy advisor, businesses can make informed decisions that align with their financial goals and risk tolerance, ultimately gaining more control over their energy expenditures.
If you’re considering a move to a REP or are interested in exploring new energy strategies, consult an energy advisor today to take full advantage of the opportunities in the deregulated market.