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Electric Utility Deregulation in the Northeast

Over the past several years, various states across the country have started to deregulate the electric utility industry. This deregulation (also often called "restructuring") will give consumers the opportunity to choose clean, renewable sources of energy. Unfortunately, even though all but one of the Northeast's states has some form of electric utility deregulation on the books, in many cases no active market has developed yet, especially for residential users. Typically this is because the standard offer is set so low that alternative suppliers have a hard time offering a cheaper product. This low standard offer price also makes it difficult for suppliers to market a "green" electricity product. Nevertheless, over the next few years, real competition should develop in most places and you will be able to choose a much more environmentally friendly form of electricity than has been available to you up to now.

Deregulation and your choice of electricity supplier will only affect the energy portion of your electric bill. Transmission, distribution and other charges will continue to be regulated by your state's public utility agency as before, and your local utility will continue to maintain the distribution system that delivers the electricity to your home. To get an overview of deregulation through out the country, see [http://www.eia.doe.gov/electricity/chg_str/retail.html. To see what the situation is in your state, go to NESEA's state-by-state guide.

Helping You Choose

Deregulation gives us the opportunity to promote a more sustainable electricity utility industry, but the opportunity will be wasted if we don't choose those electric suppliers that are relying on clean, sustainable energy choices. A program called the Green-e Certification helps consumers identify which energy providers get their energy from green sources. Green-e also requires that a portion of the electricity come from recently built sustainable energy projects, which helps promote the development of new sources of green energy. Visit their website at http://www.green-e.org to learn about Green-e certified suppliers in your state. Other suppliers can be found by visiting either http://www.wattagemonitor.com or http://www.energyguide.com.

Better Than Green Electricity

Is there anything better than buying green electricity? Yes‹don't use that electricity in the first place! Even the greenest of the green electricity puts strains on our environment. The cleanest electricity is the electricity we don't use, thanks to conservation and efficiency. Most states have programs to support conservation and efficiency efforts. Vermont has gone one step further, and established an "Energy Efficiency Utility" that will work through out the state to help Vermonters reduced their electricity usage. To learn more about what you can do to reduce your electricity usage, see the "Green Buildings" section of NESEA's website.

Useful Terms

Here are some terms that will help you when exploring the new age of deregulated electric utilities:

Environmental Impact Labeling
A number of states require electric suppliers to disclose which energy sources their electricity comes from, or what the environmental impact of the electricity is in terms of pollution generated. Often this information is presented in labels not unlike the more familiar food labels. Read the section on your state below to see if labels are required. If labels are required, look for them and use the information they contain to help you decide where you want your electricity to come from.

Standard Offer
Although some states use a different term (such as a "transition charge," "shopping credit," or "back-out credit"), generally the standard offer is the price that a consumer will pay if they do not choose a new supplier. The standard offer is an important factor in deregulation legislation, because if it is set too low, it impedes competition. In most cases, the standard offer is scheduled to increase over a the next few years.

Renewables Portfolio Standard (RPS)
In many deregulated states, regulations require that a set percentage of any utilities' total electricity production come from renewable sources. For example, a state might require that every utility in the state generate 5% of its electricity from a renewable source. A RPS is desirable because it means that all people will start receiving some of their electricity from clean energy sources, and not just those who are willing or able to pay more for renewable energy.

System (also called Societal) Benefit Charge
The system benefit charge is a small levy paid by utility customers in proportion to their usage. Most states have some sort of system benefit program. The funds collected are usually used to support energy conservation, energy efficiency, renewable energy projects.