The cost of electricity is dependent on the region of the property as it relates to the primarily source of generation as well as the maintenance cost of the local power plants, and the transmission and distribution grid. For states that have deregulated their electricity, costs are increasingly becoming more dependent on the electricity shopping skill of the specific customer.
The electricity generation supply portion of the electric bill includes between 65-85% of the total electricity cost, depending the the size of the customer and location of the property. The difference in electricity costs between electric companies can be as much as 100% in some markets. In Texas, which has a mature electricity choice market having been deregulated in 2002, the market has had time to see extreme peaks and valleys in pricing. Customers who do not shop and compare electric rates will find themselves paying electricity rates that are close to the pricing peaks as competitive electricity companies often do not take it upon themselves to lower rates just because the market allows. Texas electricity rates were three times as high as they were in the summer of 2008 as they were 18 months before that. All things being equal, a customer who shops for electricity in Texas will pay close to half of the electricity cost that another customer who does not shop will pay.
In Pennsylvania, PA electric companies are offering customers electric rates that are up to 20% less than utility default rates in some areas. Customers are also finding ways to lower their electricity costs by shopping for lower electric rates in New Jersey, Maryland, Illinois, and Connecticut. As electric competition becomes more common place in these states and others, the responsibility of controlling electricity cost will be transferred from the state government to the consumer. It is important for consumers in deregulated states to understand their state’s energy choice laws and options.