Electricity Deregulation In New York – A Plus For Businesses

Right now, many businesses are making their exit from the State of New York because of the rising energy prices. By deregulating electricity, businesses will have a reason to stay, as well as aid in the growth of the economy.

When the power companies were first set up, each one was given a set territory where they could run lines and serve end customers. These territories were regulated by the State, and to a much lesser extent, by the Federal government. These power companies were responsible for providing hookups, generating the electricity, and maintenance of their power lines to their customers.

Much of the generation of electrical power was done either using local hydropower resources (such as that in the Niagara Falls area), by the burning of fossil fuels like coal, or through the use of a nuclear plane (like the Ginnea plant in the Rochester area). The downside to this process was that the costs to generate electricity to customers could vary significantly from area to area, so the customer was more or less held captive by the prices charged by their local utility. For the most part, consumers had no other choice than to hook up and pay these rates or do without.

Recourse to address perceived or actual rate discrepancies was pretty much left in the hands of the Public Service Commission, but many consumers were unsatisfied with the rulings feeling that it sided mostly with the utility for the need for rate hikes and rates over the interests of the consumer, whether private or business. As a result of the prohibitive costs, many businesses began to leave the State looking for cheaper energy prices to help reduce operating costs.

Now deregulation moves in New York State have provided new opportunities for businesses all over the state, as customers are not limited to a single power company in that territory. Businesses can go to different power companies and even find a lower price if they want. This will cut costs, and they can even use an out of state supplier if they deem it necessary.

It should be noted here that a consumer’s electricity bill is divided into two parts: one for the maintenance of the wires and connections to the business or home, and the other for the delivery and actual cost per kilowatt hour. While the charges for the delivery might reflect a savings due to lower charges from a given supplier, the maintenance charge will always be set by the local utility that “owns” the delivery wires and will remain the same, no matter who the power supplier is.

With deregulation in place, the individual business is now free to shop for a supplier of electricity based on rates that are more competitive, no matter where that supplier may be located. Marketplace competition provides the healthy incentive for power utilities to adopt more cost effective ways to generate energy as well as to bring pricing under better control to successfully compete for the consumer’s energy dollar. In addition, since the location of power suppliers can now cross state lines, consumers are afforded more stringent protection since Federal regulation and guidelines over the industry may be invoked.

Author: Jerry Dyess has been in the Texas Commercial Energy business for the past 7 years. He has published many articles on Business Electric rates.

categories: deregulation,electricity,energy,new york