How Electricity Deregulation Works Today

Growing up we had two grocery stores in the area. You had to drive about 10 miles to get to another one. There were no convenience stores, and the town had one bank. Everyone in the entire region got their gas and electric utilities from the same provider as well. There were not a lot of choices for some things if you wanted to price shop. Now there is. Stores will even match the prices of other stores. That is kind of how shopping for a lower electricity rate is. There are details online at a site that has the different electricity rates for Illinois.

If you go to a store and have them match a price, they are the ones who stocked the product, provided you the product and will accept a return if there is a problem. They just provided it at a lower price. Your electricity can be delivered the same way. Electricity is generated and put into a national grid to meet highly variable demands from day to day. Local power companies fix wires and transformers and stuff like that. They maintain the responsibility to provide you with the power, and they respond to problems when they occur. However, you can shop for a lower rate from a competitor in the electricity market. Then you pay the lower rate to the competing company, but all of your power is still provided by your local electricity company.

It sounds complicated, but it really isn’t. It would be like if all the grocery stores in the state joined a group. If you found a lower price on coffee, you could pay that lower rate at your local store even though they are the ones providing you the product. You would pay the other store and then get your coffee from the local place. This is the deregulation of electricity to provide competitive pricing.