Your Choices: Basics

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The deregulation of electric and natural gas means you have the choice of where you purchase your energy supply. When looking at energy, whether it be electric or natural gas, there are two basic parts to your overall cost:

  1. Supply/Generation: This is the generation of the commodity itself - electric or natural gas. The commodity delivered to your business is the same regardless of who produced it or where you purchased it. In a deregulated market, should a customer take no action, their local utility will - by default - purchase the commodity on their behalf.
  2. Delivery/Distribution: Your local utility's core function is to deliver the commodity to your local business and maintain and support the local distribution infrastructure. Your local utility will remain your point of contact for power outages, meter readings, etc., and will continue to provide the same quality of service and support they always have.

Purchasing supply from a third-party (a party outside of your local utility) allows you to negotiate your electric rates (by purchasing from someone besides your local utility) and provides you flexibility into how you purchase the commodity in today's markets. Your default rates through your local utility may be market-based or an average rate of periodical purchases mandated by the regulatory board. Each state and local utility is setup differently. Regardless of the specific utility, you do not have any flexibility in the way purchases are made, and you cannot align your electric and natural gas purchases with the specific goals and risk tolerance of your business.

To learn about the process of purchasing from a third-party, please continue to the process.

To learn about different ways to purchase, continue to product options.

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