Electricity Procurement FAQ's
Very simple. Consumers are given the opportunity to purchase the electricity that the consumer uses from competing electricity suppliers. The local utility no longer has a monopoly covering a geographic territory. Consumers in the utility’s Service Territory can choose to purchase electricity from other sources, but do not have to do so. Nothing else changes. The local utility will still deliver the electricity to you, service the lines, and render the bills. The local utility will continue to be paid by all customers in its service territory a monthly fee (tariff) for the delivery, servicing, and billing functions.
The process is seamless. Reliability and service are not affected. Your lights will not flicker, in fact, you will never notice when the supply begins with the competitive supplier. You do not need any new equipment, no new meters, and no new account numbers, all of that stays the same. The only difference is that you will pay a competitive supplier for the electricity you consume rather than pay the local utility. Thousands of consumers change suppliers every day and during the past decade, literally millions of businesses have taken advantage of deregulated markets and transferred electricity service to competitive suppliers.
APPI Energy analyzes your electricity account information and usage characteristics. APPI Energy positions your accounts to be reviewed by many competitive suppliers by creating a Request For Pricing Proposal unique to your accounts. This RFP is sent electronically to the competitive suppliers that will vie for your business by responding with their most competitive prices for your accounts. Several factors impact prices from suppliers. They include: your electricity usage levels (KWHs consumed each month/year); when you consume electricity (during peak periods, off-peak periods, intermediate periods, etc.); how you consume electricity (demand –KW), when you are in the competitive market seeking prices (seasonality); the electricity futures market; the term you want in your supply contract (length in years/months); specific terms and conditions your business needs in the supply contract; the type of supply contract your business wants (fixed-price or index based); how many competitive suppliers are active in your local market and the types of customers each supplier seeks; and your credit history. APPI Energy’s consultants work closely with each client to maximize their advantages and position the client to get the best prices possible and terms and conditions that fit their needs.
How and why did it get started? Electricity deregulation began in the mid 1990s. Natural gas deregulation began in the late 1980s. Energy deregulation is done on a state-by-state basis with some federal oversight and regulations administered by the Department of Energy and the Federal Energy Regulatory Commission (“FERC”). Each state has very specific rules and there are different energy markets in each state. Contact APPI Energy to get the details that apply to your location(s) and the expertise that APPI Energy provides.
During the past decade there have been thousands of reports, articles, and analyses done regarding electricity and/or natural gas deregulation. Much of the information we see in the press is not the complete story or has a political bias. The reality is that there is much empirical evidence that illustrates that businesses participating in competitive markets, have experienced many benefits including lower prices. Several policy reasons spurred deregulation. One was to attract new sources of human and financial capital to the energy industry so as to spur innovation. Another was to foster the creation of new entities that would play necessary roles in the development of the state and federal energy infrastructures. A third, was to create competition among suppliers that would develop new products and services for consumers. These goals are being met every day in competitive energy markets.
Nothing changes. The same local utility service team will be dispatched to service the power lines and turn your power back on under the same protocols that have existed for years. Your local utility is still responsible for all aspects of delivering and servicing your power. Your business, and all other consumers in the utility’s service territory, including residences, schools, churches, businesses, etc, pay a tariff amount every month to the utility for the delivery and servicing of the wires. In fact, the local utility is indifferent as to what supplier a customer uses. It delivers the electricity through its wires just as it always has. Further, the utility does not even know which of its delivery customers are using competitive suppliers.