Unless you’re a relative of Uncle Sam, chances are you’re not a fan of having to pay bills. What’s even worse, is when you end up getting charged double the amount that you’re used to for something like your monthly electric bill.
If this has happened to you, and you’re not sure why, that’s ok. We’ve got you covered. We’re going to explain the differences between regulated and deregulated markets, and how they impact your bill, but first we’re going to discuss why your location plays a major part on your electric bill doubling.
How extreme weather can make your electric bill double.
Believe it or not, month to month doubling of residential electric bills is not as unusual as you would think. One of the main reasons your electric bill may have doubled is because of extreme climate.
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This means that places with extreme summers or winters will usually have periods in which rates increase – especially if located in a regulated market. Let’s say for example you live in Minneapolis, Minnesota – a beautiful city, but with rough winters. As soon as the weather begins to approach freezing temperatures, top priority becomes keeping your home warm. To stay warm during a Minneapolis winter, your heater will have to work overtime.
That extra usage of your heater will often result in a higher energy bill. Utility companies are aware of these times in which excessive usage is common – which is why you’ll usually find higher rates during months of extreme weather, as well as during peak hours. In case you don’t know, peak hours are the times during a day when energy consumption is at its highest. During these times, it’s not uncommon to see a spike in your energy rate.
According to the U.S. Energy Information Administration (EIA), the average household currently pays 13.01 cents per kWh (kilowatt hour). This is up from the nationwide average of 2017 which was 12.68 cents per kWh. Energy costs have constantly risen year over year, so your rates have consistently increased. Unfortunately, extreme climate months may be the reason why your electricity bill has doubled.
Another factor to consider is whether you live in a state that is regulated or deregulated.
How regulated and deregulated markets directly impact your electric bill.
If you live in a regulated market, you’ll be left with only one option. In regulated markets, the electric utility companies own all of the transmission and distribution equipment. Because they own the energy generated, plus the means of distribution, you’re left with no other choice in energy supplier.
When it comes to deregulated markets, utility companies do not own every part of the process. Instead, you have the power of choice in who to buy your energy supply from. In a deregulated market, multiple retail electric suppliers offer their own rates for electricity to the public and you can choose whom you buy your energy from. This will also bring about a change in the way you pay your bill.
In a regulated market you’ll only get one bill from your utility company since they own the entire process. With a deregulated market, you’ll get two separate electric bills. One will be from the retail supplier you choose, while the other is from your local distribution utility company (which is regulated and owns all the infrastructure that delivers your electricity).
Living in a regulated state doesn’t really give you any wiggle room to search for better alternatives. Which means if your utilities decide to increase their rates during winter or summer – you’re left with little to no other options. If you live in a deregulated state, and are seeing your rates increase, you have the benefit of searching for a better supplier.
When it comes to the U.S. landscape, there are many states that are still regulated. But there are some states with either deregulated gas markets, deregulated electricity markets, or both.
As you can see by now, there are various factors that come into play when trying to figure out why your electric bill doubled. But with a little bit of research, you’ll be able to see what type of market you live in. If it just so happens to be a deregulated one, take advantage of the competitive marketplace made available to you. By doing so, you may come across a more affordable supplier – which would’ve been impossible if your market was still regulated.