I just read a good article today in the July/August 2011 edition of EnergyBiz, headlined "Fast and Slow but Forward", regarding the direction of electricity deregulation.  The article addresses the good, the bad and the ugly issues that have faced deregulated markets over the past 10 years.  In short, there are no new deregulatory efforts going on at the present time. This is, in part, due to the bad press regarding retail energy prices increasing due to deregulation, rather than decreasing.  In particular, the State of California saw an 800 percent increase in the wholesale price of electricity.

One of the major reasons (besides the drought, heat wave and sudden increase in demand) was that California deregulated wholesale prices, but capped retail prices.  This provided no incentive to compete.On the other hand, the Commonwealth of Pennsylvania did it right.  They deregulated the wholesale price, lifted rate caps and provided a Purchase of Receivables (POR) program as well.  This move truly opened up the market, provided REAL competition and, from our experience, lowered energy rates.  Texas is another state that has seen success in the deregulated market, from eliminating price caps and separating generation from transmission of electricity.

So, it's apparent that deregulation does work if structured right.  There are 20 states with electric deregulation of some type that we can look to for trends on what works and what doesn't.  The fact is that no matter what the state, a few common elements apply.  Many electric customers are unaware of the energy choice, some aren't sure how to capitalize on their choice, and others boldly make a choice without having a good understanding of their options. The smart ones call on the assistance of an energy management firm to help sort out the complexities of the purchase. The fees you pay will yield you more in additional savings, while exposing you to less risk.