In the state of Pennsylvania our electricity market was regulated and controlled by our government up until 1996.  Since then our government has deregulated the market with the hopes of lowering electricity prices and creating a competitive market for its customers.  In 1995 under the regulated structure, Pennsylvania spent $10 billion on electricity.  If the state was paying the national average we would have saved 15 percent, $1.5 billion, in the same year.  The state has hopes to do even better than that and have prices fall to a competitive price which would have saved an estimated 25 percent, $2.5 billion, in that same year.

Deregulation is nothing new to us, we have seen it in markets such as trucking, airline travel, and telephone service.  For the electric industry, deregulation means the generation portion of electricity service will be open to competition.  However, the transmission and distribution of the electricity will remain regulated and your local utility company will continue to distribute electricity to you and provide customer services to you.  The generation of electricity is being deregulated, which means you will have the opportunity to shop around for the electricity-generation supplier of choice.

The Public Utilities Commission has been very active with the deregulation and creating guideline so that consumer receive the same customer service they did previous to the deregulation regardless of the supplier they choose to receive their electricity from.

Your local utility company will continue to distribute electricity to you and provide customer services to you.  No matter who you select as your electricity generation supplier, you will remain a customer of your local utility company for transmission, distribution, and local services.  These services will remain regulated.  Your local utility company will be responsible for providing line repair and maintenance, restoring service after storms and accidents, and providing customer services including metering and billing.  When your local utility company is restoring electrical service after a storm or accident, the line crews cannot give preferential treatment to those customers purchasing electricity from the company.  This is assured by the Public Utilities Commission of Pennsylvania.

Your local utility will also serve as “provider of last resort.”  In other words, if your selected electricity generation supplier is unable to provide the electricity you need, your local utility company will supply you with electricity at the default price with no interruption of service.

Due to “Electric Discount and Energy Competition Act”, which among other things allows competition in the power generation portion of the electric industry, New Jersey electricity customers are able to choose a company that will supply them with electric power.  Before this change in the law there were four local utility companies responsible for generating electricity, transmitting the power to all regions, and distributing the power to the individual homes and businesses. But now due to the change in law, the generation sector of electricity has been deregulated so the initial four incumbent providers are not the only producers of energy.  The incumbent utilites are still in charge of the transmission and distribution (lines and wires), which remains regulated by the state.

What this means to the customer is that they now have a choice in how the electricity they use is being created.  New Jersey has created something they are calling a Power Scorecard.  This Power Scorecard provides information on the electricity service choices available to residential consumers in New Jersey.  The Power Scorecard provides a list of the electricity product choices, environmental ratings for each product, the price of the product, and information on how to contact the product supplier to arrange to purchase that product.

This was designed to help customers see first the options that are available, and second the effect that these different products have on the environment.  There are eight different categories that the Scorecard has and for the renewable energy products.  Then once you decide on which would be best for you there is also pricing and contact information for you to inquire with the supplier of each product.

Many businesses have been reluctant to look into the benefits of electricity deregulation because of the bad taste that telephone deregulation has left in their mouths.

When the telephone market first became deregulated, changing providers could be a huge headache for businesses.  There were interruptions in service, lengthy contracts, and promised savings that were negated by hidden charges and fees.  So now that electricity markets have become deregulated in states such as Texas, Pennsylvania, Connecticut, and New Jersey, there is a lot of hesitation for companies that are not educated about the logistics to look into an alternative provider.

Unlike the telephone market, the transition to an alternative provider in the electricity market can be extremely easy with no risk.  When an alternative electricity provider is chosen to save money, there are no interruptions in service.  This has to do with the way electricity deregulation is set up.  The lines and wires portion remains regulated by the state.  The same company that has serviced your lines and wires in the past will remain the same.  What has changed is your choice to select who supplies your electricity.  This means that nobody will have to come to you and change any wires or modify your electricity in any way.  The only thing that changes is the rate.

If you have not done anything and are still with your incumbent provider then you are on that provider’s default rate that the state mandates they charge all customers who are slow to choose a competive supplier.  Depending on your state and market conditions, the default rate can be anywhere from 10-30% higher then what a competitive supplier can provide you.

The only way to get off the default rate is to find an alternate provider to lock you in with a lower rate.  Then the alternative electric provider will supply your incumbent provider with the electricity which they will then supply to you.  You will not be able to tell a difference in service nor will you be able to tell when the switch is made because it is seamless.

Another issue that concerns bussinesses is the question of who they should contact if electricity goes out?  The incumbent provider is still regulated by the state and remains your lines and wires (or Transmission and Distribution) company.  They will still be the company to contact in the event that there is a power failure due to whether or other natural disasters.  They will still provide you with the same level of service that they always have, whether you continue to pay the high default rate or find another alternative provider.

There are no addition fees to make the switch from the incumbent provider to another, so there is absolutely no reason a company would not want to look into the benefits of electricity deregulation.  There are substantial saving available that can benefit any business.

Your electricity is delivered to you through lines and wires, these lines and wires make up “highways” for the electricity to travel on to get to our homes and businesses.  These “highways” are also known as an electricity grid.  The smart grid is the same concept but with a little more technology to help make this process more efficient and reliable.  This is done by adding computers and communications technology to the existing electricity grid.

In addition to the utility companies being able to distribute electricity more efficiently, it can also help prevent power outages.  Instead of not knowing about a problem until customers are complaining, these computers can communicate problems with the utility before they ever effect the supply of electricity.

On top of the smart grid helping the utility companies become more efficient, it allows us to be more cost efficient with our electricity usage at home as well.  When you are receiving electricity in a smart grid it allows you to install what is called a smart meter.  With a smart meter there are many ways for you to see how efficient you are being with your electricity use.  For instance, you can have external devices in your home that can tell you how much electricity you are using at any given time, this will allow you to lower your usage during on-peak hours.  There are also systems in place that you can go online and see how much electricity each individual appliances is using, which can also allow to view where electricity is being wasted.Your electricity is delivered to you through lines and wires, these lines and wires make up “highways” for the electricity to travel on to get to our homes and businesses.  These “highways” are also known as an electricity grid.  The smart grid is the same concept but with a little more technology to help make this process more efficient and reliable.  This is done by adding computers and communications technology to the existing electricity grid.

In addition to the utility companies being able to distribute electricity more efficiently, it can also help prevent power outages.  Instead of not knowing about a problem until customers are complaining, these computers can communicate problems with the utility before they ever effect the supply of electricity.

On top of the smart grid helping the utility companies become more efficient, it allows us to be more cost efficient with our electricity usage at home as well.  When you are receiving electricity in a smart grid it allows you to install what is called a smart meter.  With a smart meter there are many ways for you to see how efficient you are being with your electricity use.  For instance, you can have external devices in your home that can tell you how much electricity you are using at any given time, this will allow you to lower your usage during on-peak hours.  There are also systems in place that you can go online and see how much electricity each individual appliances is using, which can also allow to view where electricity is being wasted.

Electricity is one of the biggest expenses for a company, usually right under their payroll.  So when a company is in a deregulated market it can be very beneficial for that company to find a lower rate on their electricity.  When companies in deregulated areas are looking for the best rate on their electricity there are a few different ways to go about it.  They can either take one of their employees and have them work with each provider and try and receive the best rate, or they can use an electricity broker who will act on their behalf and retrieve bids for them.

Some companies might want to keep this decision in house and just appoint one of their current employees to perform this task.  Doing this is not always the most efficient way of accomplishing the goal of securing the lowest market rate possible.  First, you are taking whomever you appoint to this job away from their normal activities which a lot of time companies can not afford to do.  Another disadvantage that this may bring to your company, there can be a lot of hidden charges and clauses that someone who does not deal with these contracts on a regular basis could over look when signing a new contract.

That is why there are a number of companies using electricity brokers when it comes to these decisions.  An electricity broker can benefit your company by taking all of the leg work out of this decision for you.  They procure your electricity usage history, and analyze the data.  Then can send this information to a number of providers and receive multiple competitive bids for you on your behalf.

On top of this a broker can ensure you receive all the necessary contract concessions that you would not normally get.  Like making sure there is a ‘Blend and Extend Clause’ in there.  The most important added value service an electricity broker can provide for his client is the implementation and use of a ‘Blend and Extend Clause’ in the electricity contract with the Retail Electric Provider. The ‘Blend and Extend Clause’ allows a customer to renegotiate and lower there fixed rate if the market takes a drop after the execution of the original contract. With the natural gas and electricity markets being as volatile as they have been, this added service is a necessity if a company wants to minimize their energy expenditure.

Something else that a broker will do for his client is check for any bandwidth limitation clauses, this will charge the customer additional fees if they go above or below a certain percent usage for a given term.  You will want to make sure that you are not limited in case of expansion or down sizing.

Also, a broker will audit his clients usage twice a year from the regulated utility twice a year.  This will give you a peace of mind that the electric provider is billing you for the correct amount of electricity.

The best thing about using a broker is that this can all be done without any additional charge to you or your company.  They act as a buyer’s agent, looking out for their client’s best interest, and are compensated a prearranged fee by the provider who comes in with the best offer.

On August 1, 2003, the NJ Board of Public Utilities removed electricity rate caps that had been established by New Jersey’s electric utilities resulting in a state wide deregulated electricity market.   If taken advantage of properly, business consumers can save on their electricity spending.

The largest non-residential electricity customers in New Jersey who have decided to stay on utility service are on default electricity rates that vary with regional power pool hourly prices.  These large electricity customers, 1,200 kW peak usage and above, are known as “Commercial and Industrial Energy Pricing” (CIEP) customers and are exposed to these variable, market-based rates. All non-residential customers remaining on utility service with usage less than 1,200 kW are on fixed default rates that are established by an auction conducted by the NJ Board of Public Utilities.

Default rates for 2009 are based on auctions that were facilitated in 2006, 2007, and 2008.  Electricity prices were much higher during these years on the wholesale market then what they are in 2009.  This has caused a surge in competitive retail electric providers who are now able to offer business customers a rate on their electricity that is 10-25% less than what they are paying with the utility default rate.

Businesses in New Jersey are at risk of increasing electricity rates during the coming summer months.  The Basic Generation Service (BGS) rate increases sometimes as much as 20% during the months of June-September.  This electricity rate increase is due to the high demand for electricity during these months.

There are ways for you to avoid these increased power rates and save money on your electricity bill.  Thanks to the deregulation laws in New Jersey, you are able to find a competing electricity provider to supply you with a competitive rate and help decrease your monthly electricity charges.  This rate won’t just save you a significant amount during the summer months, it will reduce your electricity costs year round.

Kilowatt hours (KWh) is the measurement used that shows hom much energy a home or building uses.  On your electricity bill you will see the monthly KWh used for the period multiplied by the rate that you are being charged to determine the bill amount.

KWh defined is a unit of energy using 1 KW of power for a period of 1 hour.  Energy equal power multiplied by time.  If you turn on the lights in a room that has 10 1 KW light bulbs for 5 hours, then you have consumed 50 KWh.

There is a new device on the market that claims it can save you money on your electricity spending, it is called the Smart Meter.  The Smart Meter is an advanced electrical meter identifies consumption in more detail than a conventional meter. It will also communicates that information back to the local utility company for monitoring and billing purposes for both you and them.

In the past traditional electrical meters only measure total consumption and as such provide no information of when the energy was consumed.  Now we are trying to be more efficient with are energy so the old ways just are not very helpful.  The way electricity works is it is generated in one place and then distributed to our local electricity providers who will then submit it to our homes and offices.  There has been a lot of wasted electricity in the past because you can not store this energy.  Once it has been generated if it is not used it will be wasted.  So during certain hours of the day when we are not using a lot of electricity, these are called the off peak hours, the price drops because the demand is not high.  Just the opposite happens during the on peak hours.  These new Smart Meters will help by letting the utility companies know how much electricity is being used at certain times during the day, it will also allow you to know how much electricity you are using at any given time.  This will be beneficial to both parties, you can lower your bill by using less electricity during the off peak hours and when you are not home.  While the electricity companies have an even better idea of how much electricity well need to be generated for any given time cutting down on all the wasted supply.

This is still a very new product so not all the problems are worked out yet.  The new meters are not cheap and the utility companies are passing these expenses off to the customer along with adding a small monthly charge for the data that will be transmitted.  A lot of people are upset with this and think that the costs do not out weight the benefits.  But  there are a number of trials going on through out the U.S. among other countries so time will tell.