Everything You Need to Know About Energy Deregulation and Its Benefits to Small Businesses

2019 marks the 30th anniversary of deregulated energy in the United States. With the changing government policy, different electricity supplying companies were able to sell electricity directly to their consumers while natural gas suppliers could do the same. Since energy independence, 34 states have allowed at least one of the energy sources to be deregulated, which has provided benefits to multiple businesses.

What is energy deregulation?

In the past, local energy companies provided small businesses with a single option for electricity and gas. This meant that customers did not have a choice in the controlled market and there was no competition. The controlled system gave the energy industry the stability it needed. However, business owners later realized that the system was outdated and restrictive. This forced a considerable number of states to introduce a deregulated energy market.

In a deregulated market, business owners have the option of choosing the local company that will supply natural gas and electricity in their businesses. They also have the option of choosing the rates they would like to pay because the market is free and there is price competition.

Deregulated energy is considered to be beneficial to small businesses. However, many small business organizations have yet to become energy independent because they do not know the benefits of deregulated energy, which have been discussed below.

1. Choices

Regulated energy market is organized such that small businesses cannot choose their energy supplier. They are obligated to use energy from the utility, which means that they do not have authority over the energy strategies they want to implement in their businesses. However, energy deregulation allows business owners to plan on who will supply energy for their business.

There is freedom of choice to the extent that businesses can source their energy from third party suppliers. Customers have been given the option to try various energy products in the market and decide what meets their specific needs. In this market, deregulated energy consulting is very important because it helps businesses to customize their energy needs.

2. Budget Certainty

Budgeting and budget certainty is a very important component in small business management. However, budgetary problems are experienced in a controlled market because there is no constant energy usage. It is very difficult for the owner of the company to determine the amount that will be spent on energy for budgeting purposes.

In a deregulated energy market, the usage of each month will vary, but business owners will be in a position to calculate their energy costs. This means that small business owners will be able to come up with estimated energy costs, which allows for easier budgeting. Nevertheless, utility bill management is an important component in any energy market as it allows businesses to prepare in advance.

3. Risk Management

Energy risk management is an important risk assessment strategy as it helps small businesses to understand all the charges associated with energy consumption and where to undertake energy optimization. The controlled energy market is full of risks as energy demand leads to high energy charges. This means that small businesses lose money, which is detrimental to their business.

Deregulated energy market helps small businesses to use deregulation to their advantage and thus avoid energy risks. Most of the small businesses lock their energy consumption in a fixed market, which means that they are not going to experience financial risks when demand increases. This strategy protects the business from losing money both in the short and long term.

4. Quality Customer Services

It is apparent that, in a monopolistic market, the monopoly does not offer any incentive to the customers. Customer services are always poor because there is no competition. The controlled energy market caused many businesses to spend days without energy supply, which had detrimental impacts on their operations. However, the deregulated energy market attracts competition, which helps small businesses to get quality customers from their suppliers.

Some people still think that deregulation has no benefits to businesses. However, it is clear that businesses are now using solar panels, placing them 15 and 40 degrees, installed on south-facing roofs, which was not possible. Companies have the choice to select their energy supplier and are getting predictable, efficient, and reliable energy services.