If you live in a state that offers electric choice, you are most likely able to choose from a host of electricity supply providers to help you reduce your monthly electric bill. However, many don’t understand how a supplier can offer lower electricity supply prices than the local utility. We asked the energy experts at AEP Energy to help explain the concept in a way that’s easy to understand.
Electricity, as well as most other commodities, is capable of being bought, sold and traded on the open market. In a competitive market (a.k.a. electric choice), participating electricity supply providers closely monitor electricity prices, minute by minute, and purchase electricity for their customers based on current market prices. Suppliers then sell this power to consumers like us to help save money on the generation and transmission (where applicable) service portions of our local utility bill. Not all states can participate though. To see if you are eligible, click here and enter your zip code to verify.
On the flip side, your local utility is regulated by the state’s Public Utilities Commission, which dictates specific rules and regulations that must be followed, including those that prevent utilities from actively participating in the open market. These rules are in place to avoid the monopolization of the market since the utility is typically the largest purchaser in the area.
New Options Provide Peace of Mind
The local utility’s supply charges may fluctuate based on seasonality, utility fuel, and other costs and are ultimately set by the state’s regulatory entity. Since electricity supply providers purchase electricity differently, they can offer customers a variety of different pricing options, like a “fixed” price per kilowatt-hour (kWh). Some customers find this type of price attractive since it brings peace of mind knowing that their electricity supply price is stable and predictable.
In summary, electric choice allows consumers to shop for electricity and find the best deal since electricity supply providers offer prices that more closely reflect current market conditions. Get started today with AEP Energy – a trusted name in the energy industry. We’re here to protect your bills from rising energy rates and enrollment only takes a few minutes. Click to learn more or enroll.
Happy Shopping!
AEP Energy does not guarantee the accuracy, timeliness, suitability, completeness, freedom from error, or value of any information herein. The information presented is provided “as is”, “as available”, and for informational purposes only, speaks only to events or circumstances on or before the date it is presented, and should not be construed as advice, a recommendation, or a guarantee of future results. AEP Energy disclaims any and all liabilities and warranties related hereto, including any obligation to update or correct the information herein. Summaries and website links included herein (collectively, “Links”) are not under AEP Energy’s control and are provided for reference only and not for commercial purposes. AEP Energy does not endorse or approve of the Links or related information and does not provide any warranty of any kind or nature related thereto.
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