Electricity deregulation became more widely available in 2000. In the years since, a total of 16 states have deregulated electricity at some level, offering options that include green energy electricity sources. Among these states, Texas is the most deregulated electricity market with about 85% of consumers having access to a choice in electricity providers. (The map to the right shows states with electricity and natural gas deregulation.)
For log home homeowners who include Katahdin’s Solar Ready program in their plans, deregulation offers an additional opportunity to maintain their renewable energy profile. And for log home owners who are delaying adding a solar array, selecting a green electricity provider can keep your green goals in sight.
Even with a solar panel set-up, most Katahdin homeowners find they will remain connected to the electric power grid and participate in a process called net metering. This allows homeowners to “store” the excess power produced during peak production with the utility. Net metering also allows the utility to provide electricity back to the homeowner when needed, which is where deregulation and consumer choice plays a role.
There are three types of companies in the electricity market:
- Generators are companies that produce electricity.
- Transmission and distribution service providers (TDSPs) are the companies that maintain wires and the poles that deliver energy.
- Retail Electric Providers (REPs) purchase electricity from the generators, which they then resell to consumers and provide customer service and billing.
While each state is different, we’ll use Maine as an example of how to select an energy provider and get the deal that’s best for you. Maine’s Public Utility Commission (PUC) provides guidelines for consumers selecting an independent retail electric provider. Their website offers a list of residential, commercial and industrial companies here that offer power in the state, arranged by electric company service area. The residential link leads to an array of providers, their company information and links to websites to find out rates, terms, and sources of power, if applicable.
Basic Contract of an Electric Company
When it comes to signing a contract with an REP, it is important to read it through carefully. There might be instances where you want to terminate your contract before it expires. You need to know if that action is possible, as well as if there are any termination fees associated with that action. Some of the terms that might appear on an electricity provider contract include:
- Price Structure – is the price fixed or variable? The REP should provide the pricing structure information for the customer directly on the contract.
- Generation/Supply Price – displayed as either dollars or cents per kilowatt hour (kWh).
- Deposit Requirements – Some companies require customers to provide a deposit which should be listed in the contract.
- Incentives – Any bonuses, discounts, cash back opportunities, etc. are also detailed on the contract.
- Contract Length – The start and end date of the contract or agreement is listed clearly and in plain language.
- Cancellation/Early Termination Fees – Any fees associated to ending the contract with the REP prior to the end date are listed clearly and in plain language.
- Renewal Terms – How the customer is treated at the end of the contract is provided. This term should not include any fees. Note whether or not the contract is automatically renewed and if so, the notification terms.
Types of Retail Energy Provider Plans
Electricity providers can offer many different kinds of plans and services including: fixed, variable rate, indexed and green plans. Green plans are interesting because they allow the consumer to purchase the supply of electricity that is generated by clean resources like the sun or wind. In Texas for example, it is common for an REP who offers a green plan to provide electricity generated from wind farms.
Comparing REPs and Your Utility
In Maine, the rate that the utility charges for electricity is called the “Standard Offer.” This pricing is listed as $ per kilowatt. This is the baseline you’ll need to compare with REP offers. It’s probably a good idea to check with your state utility authority to see if there is a rate change on the horizon that could affect your REP contract decisions. Once you consider all the options available in your deregulated state, you may opt for a green power provider to enhance your homes solar power array.