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Understanding New York Deregulation

Many New York energy customers don't realize they have the freedom to choose the company that supplies their natural gas or electricity. Actually, New York deregulation opened both of those markets to competition back in 1996. The Public Service Commission (PSC) helped institute New York deregulation as a way to encourage competition in hopes of lowering energy pricing and providing more energy choice options across the state.

In simple terms, New York deregulation means your utility — whether you're in the territory of ConEd, National Grid or many others — does not have a monopoly on your business. While the delivery of electricity and natural gas will remain your utility's responsibility, New York deregulation gives you the power to shop for energy supply rates from many retail energy companies.

How New York deregulation came to be

During the 1990s energy costs were soaring in the Northeast. States across the region were exploring ways to slow down energy inflation while maintaining reliable service to residents and business owners. The beginning stages of New York deregulation came as the PSC divided the energy costs on consumer bills into two categories: energy supply costs and energy delivery costs.

This division of charges paved the way for a true redefinition of energy service, or New York deregulation, with the introduction of retail energy companies into the market. Best of all, New York deregulation maintains the established service relationships between customers and their utilities, making the transition to a retailer as painless as possible. Choosing to purchase your energy supply from a retailer is as simple as making a phone call. Only by exercising your power to choose will you truly make the most of New York deregulation.

According to the PSC, more than 1 million residents and businesses are taking advantage of New York deregulation already by having chosen to purchase their energy supply through a retailer. The impact of New York deregulation is certainly noticeable, but many New Yorkers are still electing to purchase their energy supply from their utilities. If you are one of these residents or business owners not embracing New York deregulation, now is the time for you take a few minutes to explore your options. After all, looking can't hurt and besides, you might find an energy plan made possible by New York deregulation that saves you a lot of money!

How does New York deregulation affect me?

New York deregulation transforms the old model for the energy industry by separating the generation and sale of energy from the responsibilities of utilities. Before New York deregulation of the energy industry, utilities had complete control over the entire process, from energy generation all the way to distribution. In the New York deregulation model, generation companies produce energy, retailers purchase energy in bulk then repackage it and sell it to consumers, and utilities deliver the energy consumers purchase to them.

Utilities are still able to sell consumers their energy supply in the New York deregulation market, but the rates charged by the utility are regulated. In contrast, New York deregulation retailers are responsible for their own package definition, which often means consumers could pay less for their energy by purchasing it through a retailer than they would if they continued to buy their supply at the regulated utility rate.

Getting New York deregulation to work for you

The first step to capitalizing on New York deregulation is to look into your options to decide whether to switch energy supply companies. By choosing a new electricity or natural gas supplier you could lower your energy costs each month, but before doing so there are a few things to consider.

First, you should closely examine what you are currently paying for energy. This is particularly important if you haven't actually looked at your energy bills in a while. Pay attention to the summary of your charges because you'll need a frame of reference to find better rates. Your bill should include itemized charges for your supply or commodity price, a distribution fee and any other miscellaneous taxes and fees from your utility.

Once you have determined the rate you're paying for energy, you can do some informed shopping for offers from various retail energy companies in the New York deregulation system. There are several things you need to pay attention to when investigating plans for your energy supply.

Rate structure: Choosing a plan with the right rate structure for your usage habits can make a big difference in your bill. Additionally, rate structures offer different perks that you should weigh against one another before making a final decision. Many plans offered by retail energy companies fall into two types of rate structures: fixed-rate plans and variable-rate plans.

Fixed rates offer a level of price security by guaranteeing your rate for each unit of supply will remain the same for the duration of your contract. Variable rates can fluctuate based on any number of factors from one month to the next. One of the greatest values of New York deregulation is the freedom consumers have to choose a rate structure.

Contract length: Another major consideration when comparing energy plans should be the length of the contract required by any particular energy company. Plans with fixed rates sometimes require longer contracts than those with variable rates.

Company reputation: As with any commodity, the company associated with an energy plan should have some degree of bearing on your decision. Some energy companies have been selling plans ever since New York deregulation took hold. Others are recent entries into the market.

New York energy facts

In addition to the New York deregulation system, there are many facts about energy that set the state apart. While New York deregulation is something to take advantage of, here are some things about New York to take pride in: