Electricity Service Can Be Complicated
When relocating to a deregulated electricity market things can be very complicated. I remember when I first had the option to change electricity service providers I was completely in the dark as how that was even possible. For instance, take a look outside at your electricity pole. Do you see more than one electricity line coming to your house? This common knowledge made me question how there could be a choice with whom I chose to be my electricity service provider.
Electricity companies are actually divided up into 3 distinct entities and most deregulated markets have broken up prior monopolies in the electric utility arena into 3 seperate entities. Once these electricity utilities are broken up they can no longer provide partiality to each other. The first entity is the electricity generation company. These companies create the power from things like nuclear, wind, solar, hydro, coal fired, or natural gas powered power plants. These electricity is created for instance, in a natural gas power plant by steam. This steam turns large turbines that create electricity. The electricity is than stored and traferred through electricity power lines. A lot of the electricity isn't stored in the transformers but in the actual lines between each transformer on your electricity pole.
The transformers, poles and wires is a seperate utility known as the transmission distribution service provider. Some companies and people call this company the TDSP or the poles and wires company. Old foggies still familiar with the old monopoly may refer to the TDSP company by the monopoly brand name prior to it being deregulated even though the name has likely changed.
The last business component of an electricity utility is the retail electricity provider arm. This part of the power company is mainly a billing company that also hedges the energy out on trading markets like the NYMEX. The NYMEX trades commodities like oil, natural gas and other fuels. In Texas 45% of the raw commodity used to create electricity is natural gas so retail electricity providers will hedge the price to insure against price spikes related to fuel price increases and so forth. A high demand month may be a hot day in the summer when air conditioners get turned on full blast. This causes more people to use more energy and can raise the cost of electricity prices. If retail electricity providers have not hedged energy for their customers than the price they charge their customers may go up and the customer ultimately gets mad of they were not aware that they were on a variable electricity rate subject to change.
It can become very odd when although broken up are still owned by the same company. A Texas electricity conpany that was once a monopoly was divided up and no longer the same company but were than bought up by a holding company and each entity was taken in.
On a deregulated electricity bill their will be several different line items and each will be subdivided on these 3 entities. Sometimes there may be only 2 subdisvions. There will also likely be some taxes, tarifs, and fuel surcharges. Sometimes a deregulated retail electricity provider will try and put part of their retail profit margin under an official heading to make it seem they are not responsible for a particular charge. Dishonest practoces by hiding the actual electricity rate is usually combated by state regulators and consumers. Watchdog agencies and news organizations will also keep an eye out on dishonest practices retail electricity companies may attempt to pass over on the public.
To correctly understand a retail electricity bill we recommend calling each divisional business entity that makes up the charges on a deregulated electricity bill. Find out what their charge is as well as the electricity usage they have down for you for the particular month in question. Add up each charge and compare it to the electricity bill you were given by the retail electricity provider you chose to service your billing and hedging of your electric rate. If you notice any funny business call the retail electric provider and get down to the bottom of it. If you want you can file a complaint with your local utilities regulating organization to make sure the provider that falsely billed you does not do it to anyone else.
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