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Should I Stay Or Should I Go (with the Utility)?

Posted on 03/02/2016

People are often surprised to learn that they have a choice when it comes to energy supply. Retail energy makes that possible. And in my view, having the ability to choose is far more powerful than no choice at all.

Christian McArthur,

Executive Vice President of Procurement, Pricing and Product Engineering, Crius Energy

As soon as people find out what I do for a living, I’m always asked two questions:

    1.) What the heck is retail energy?

    2.) So tell me, should I stay with the utility or choose a third-party energy supplier?

Since I have long been part of an industry that at its core is based on choice – I always respond in exactly the same way: Let me tell you what I know to be true and then you decide.

As recently as the 1980s, consumers didn’t have a choice when it came to energy. Utilities had a monopoly and everyone paid their portion of whatever government-guaranteed profit was doled out to each utility based upon a complicated and dated rate structure. If you were a consumer back then, you secretly hoped that your utility was well-equipped to manage unexpected price shocks like the 1970s oil embargoes so that you could enjoy consistent and predictable energy rates.

Then, beginning in the 1990s, the federal government acted to inject some competition into the market. At the same time, many states acted to end monopoly protections for retail sales of electricity and natural gas. Gradually, large competitive wholesale power markets overseen by large regional grid operators emerged. Taken together, this meant that for the first time, consumers in a growing number of states could make their own choice when it came to energy, choosing a retail electric or natural gas supplier just as they did a cable television or cell phone service provider.

Today, roughly one third of all U.S. states have energy choice. In these states, often called deregulated energy markets, energy customers still receive one bill but with two main components: a transportation and distribution charge, and a charge for the energy itself (which is typically the largest contributor to the ultimate price customers pay). The utility remains responsible for the poles, pipes and wires that deliver the energy (the transportation and distribution costs). But the supply portion – the electric energy or natural gas – is subject to competition and can be provided by a retail energy supplier.

Retail energy suppliers do not work for, nor are we endorsed by, utilities. But we do work with the utility companies to ensure that consumers can easily switch their energy supply with proper authorization. And while residents in some energy choice states have been slow to exercise their power to choose, around one-quarter of all consumers in deregulated energy markets today are opting to get their supply from third-party providers. Why?  

With 2015 the warmest year on record (and January 2016 the warmest month on record), more and more consumers are doing what they can to limit their carbon footprint by making a more responsible energy choice. Viridian customers for example, have chosen to be part of a powerful collective impact that has amounted to 7 billion pounds of harmful CO2 emissions avoided since 2009.

At the same time, other consumers select third-party suppliers based on price, contract term or the perks and rewards that come with service from a particular retailer. For example, Energy Rewards promises powerful entertainment rewards like free premium entertainment channels, movie tickets and even gift cards.

Although specific deals and offers will differ by provider, retail energy markets in general allow consumers to choose among competitive suppliers vying for their business. This provides consumers with a range of options in terms of energy management, efficiency, renewable “green” energy and price.

And as veteran of this industry for more than a dozen years, I believe that the consumer ultimately wins when suppliers are forced to compete for their business. I also have seen first-hand how deregulated energy markets spur innovation and improvement in ways that a traditional utility monopoly approach simply cannot.

Still, people are often surprised to learn that they have a choice when it comes to energy supply. Retail energy makes that possible. And in my view, having the ability to choose is far more powerful than no choice at all.

 Any views or opinions represented in this blog are personal and belong solely to the blog author and do not represent those of Crius Energy LLC, Crius Energy Trust or its affiliates and subsidiaries. All content provided in this blog is for informational purposes only and may contain forward-looking statements. These statements are based on current expectations that involve a number of risks and uncertainties which could cause actual results to differ from those anticipated. Crius Energy makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site and will not be liable for any losses, injuries, or damages from the display or use of this information.

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