Deregulating New York

According to the Public Service Commission, 1-in-8 New Yorkers now get their power from an ESCO.

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For decades, government regulations dictated who would sell electricity and how much it would cost.

But as they say, rules are meant to be broken.

New York State “deregulated” and “unbundled” energy costs in the 1990s giving consumers the power to choose their electricity provider.

An Overview of Deregulation
In a regulated electricity market, consumers must do business with the one electric company chosen by the government to serve the area (examples are ConEdison and Orange & Rockland). Their prices are set by a "Rate Case" system and they cannot deviate from those rates.

Deregulation opened the market to competing providers, known in New York State as Energy Service Companies (ESCOs), who are not bound by the Rate Case system. ESCOs purchase energy from the same generator plants—only, we bid against each other for the lowest price.

When you buy energy (electricity and natural gas) through an ESCO, it is still delivered over the same wires or pipes by the same utility company. The switch to a new provider is practically invisible for the consumer! You still get your bill from the utility company and they are responsible to help if you have an outage.

In addition to purchasing the electricity you use from power plants and selling it for less than the big utilities, ESCOs can also offer unique products and services including fixed rate plans and plans that use renewable energy.

Deregulating New York
The New York State Public Service Commission deregulated its energy markets in 1996, by instructing most of the large utility companies to separate from their power plants. This allowed them to divide electricity bills in the state into two parts: one charge for actual electricity and another charge for delivering it and maintaining the systems. In this way, consumers gained the ability to choose their electricity supplier and save on their bill, while retaining the reliability of delivery and maintenance.

According to the Public Service Commission, 1-in-8 New Yorkers now get their power from an ESCO. The PSC guarantees all energy service through ESCOs and responds to concerns regarding service.

Other parts of the electricity markets have also changed under deregulation. Now transmission lines can be built by developers and not only the City. The City still takes part in state and federal energy related negotiations and takes part in deciding rate design, the structure of electricity markets, limitation of market power and the design and operation of various demand-side energy programs.

Deregulation in New York means that consumers are no longer forced to accept one price and one level of service. With deregulation, New Yorkers are free to shop for the best electricity rate and service on the market.

Spotlight
MPower Energy DBA MPE&G is an independent retail supplier of electricity and natural gas. The company is not affiliated with the utilities, the Maryland Public Service Commission, or any other government agency.