5 Frequently Asked Questions About Energy Choice

Since 1977, many states have implemented legislation to change how their energy markets are controlled. These states have advocated energy choice by deregulating their electricity markets, natural gas markets or both to encourage competition between suppliers.

By nature, this competitive environment has pushed suppliers to offer better customer service, incentives programs, renewable energy options and greater flexibility. Here are five frequently asked questions about energy choice and the answers you need to make an informed decision, no matter where you live.

1. What is Energy Choice?

Traditionally, energy markets are controlled by one utility and consumers have no choice but to pay the state-set rate for electricity and natural gas. In competitive or energy choice states, one utility still manages the infrastructure and its components (wires, poles, pipes) but third-party suppliers can sell the energy direct to consumers at competing costs.

This gives consumers the freedom to shop around for service that best meets their budget and needs.

2. How Does Competition Keep Costs Down?

As a consumer pursuing Energy Choice, you have the freedom to choose the supplier that best meets your energy needs and budget. You hold the power, which means suppliers will compete for your business. The way suppliers compete with one another is by becoming more efficient and investing in innovative technologies to better serve you.

The benefit of this competition is two-fold. First, it improves the economy by optimizing energy production, distribution and usage. Greater competition also helps businesses keep energy costs down by driving the demand for competitive rates.

3. What Has Energy Choice Done For Other States?

Illinois is one example of a state where competition resulted in lower costs for consumers. In 1997, Illinois passed the Illinois Electric Service Customer Choice and Rate Relief Act, which opened the state’s regulated monopoly utility industry to competitive energy suppliers. Since 1998, Illinois consumers have saved $37 billion in electricity costs by taking advantage of state legislation that expanded their options, according to a recent report by business groups.

Many other states have adopted this model, including Ohio, Wisconsin, Indiana and Texas. Michigan is one state that has capped electricity choice at 10 percent of the market, significantly reducing choice since 2008. Since then, its electric prices have gone up by more than 26 percent, a steeper increase than its neighboring states with competitive markets, according to Energy Choice Now, a group advocating for choice in Michigan.

4. If I Pursue Energy Choice and Select a New Supplier, What Will Change?

If you change suppliers, you may experience a change in the cost of service, level of customer care and available programs (ideally in your favor). Some suppliers also offer incentives programs or customizable energy plans to compete with other suppliers for your business. Additionally, certain suppliers might have more renewable energy options than others.

5. If I Choose a New Supplier, What Will Stay the Same?

No matter which supplier you choose for your electricity or natural gas service, the transmission, service and physical mechanics remain exactly as they were because you are still receiving your energy through the same transmission and distribution system. This system remains the property and responsibility of the utility. This also means you will not experience any disruption in service or quality by changing suppliers.

As a leading competitive energy supplier, Constellation offers more than just an alternative to your current utility company. We provide trusted expertise and integrated solutions to help businesses purchase energy more strategically and manage energy more efficiently. We also offer a variety of renewable energy options to help companies meet their sustainability goals, even if they don’t have the ability to generate sustainable power onsite.

To learn more about customer choice and legislation that poses a threat to that choice in Michigan, join our webinar on Wednesday, October 14th from 10:30am – 11:30am CDT. Register today!