Electricity provider switching

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Electricity provider switching is the ability of power consumers to have an option—or the "power to choose"—their electricity provider in a deregulated electricity market as permitted by a state public utilities governing body.

Australia[edit]

The Australian market has been somewhat deregulated, but still sees consumers provided with a narrow band of choices. Due to these deregulations, companies are springing up to help consumers find the best priced electricity, which given it is a commodity has allowed for downward pressure on pricing and a more affordable quality of life for the average Australian.[citation needed]

Canada[edit]

Electricity is deregulated in two Canadian provinces: Ontario and Alberta. Both markets showed price spikes in the first year of dereguation, but then settled down into a volatile but reasonably stable environment. Alberta's market is dominated by fossil fuel generation and as such reacts more closely to the price of natural gas. Ontario's generation mix is about 50% nuclear.[1]

Ontario[edit]

The consumer has the choice between buying from their local utility (Local Distribution Company - LDC) or from one of the deregulated suppliers. There is a large range of contract options from a variable price to 1,3 or 5 year fixed prices. Electricity provider switching is difficult once the consumer is in one of these contracts, unless they are close to the end of a fixed price contract. However, as of January 2010 there is a maximum termination penalty allowed.[2]

A very important element in switching electricity providers in Ontario is understanding the Global Adjustment.[3] This is an adjustment for some commitments government agencies have made on your behalf. It is included in the LDC Regulated Price Plan, but is an additional line item if a contract is signed.

Alberta[edit]

The consumer has the choice between buying from their local utility (Local Distribution Company - LDC) or from a deregulated suppliers. There are however many fewer of these in Alberta. Electricity provider switching is difficult once the consumer is in one of these contracts, unless they are close to the end of a fixed price contract.

There is a price comparison service operation in Canada.

France[edit]

In France, Electricity market is totally deregulated and consumers have the choice between the historical formerly State-owned provider EDF and several new private providers like Direct Énergie.

United Kingdom[edit]

Electricity supply has also been deregulated in the United Kingdom. For a list of suppliers see: Category:Power companies of the United Kingdom at the foot of the page.

United States[edit]

In deregulated markets such as Texas and Maryland, the state government may require the incumbent utility energy provider to allow for unlimited competition within the marketplace, where the consumer is free to choose any electricity provider. Electricity provider switching is only practical if a customer is either buying from a utility, or is at the end of a fixed price contract with a provider.[citation needed]

Certain U.S. states currently allow for consumer choice in electricity providers, with Texas being the most-widely watched deregulatory scheme. Many other states are surveying the Texas deregulatory model in order to ape its design as a paradigm for the imposition of free market forces within such other power markets.[citation needed] An interesting trend in Texas electricity provider switching has been the decline in market share (based on MWh sold) of the two largest incumbent providers - Reliant Energy and TXU Energy. In 2003, their combined market share was close to 70%. By 2008, it had declined to just over 50% and it continued to decline to near 40% by 2012. The market share of the top ten providers in Texas only declined by approximately 5% during that same period. Therefore, while the largest two retail electric providers undoubtedly lost market share to smaller firms, large competitors captured most of Reliant and TXU Energy's lost market share. The trend has been for greater diversification of load among retail providers but with most of the diversification being within the top ten providers.[4]

Currently (April 2014), 16 U.S. states and the District of Columbia have deregulated electricity markets. Along with aforementioned Maryland and Texas, electricity deregulation is current in Connecticut, Delaware, Illinois, Maine, Massachusetts, Michigan, Montana, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, and Rhode Island. Seven additional U.S. states began the process of electricity deregulation but have suspended efforts: Arizona, Arkansas, California, Nevada, New Mexico, Virginia, and Wyoming.[5]

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