Deregulation Created Choice. Most Commercial Customers Are Still on the Default Rate.

Retail electricity deregulation was supposed to create a competitive market where commercial customers benefit from supplier competition and optimal rate selection. In states like Texas, New York, Pennsylvania, Illinois, and Ohio, commercial customers have the right to choose their electricity supplier.

Thirty years after deregulation began, the majority of commercial customers in these states are still on an incumbent utility's default rate. Not because the default rate is optimal — it often is not — but because choosing a competitive supplier requires analysis, documentation, and ongoing management that most commercial organizations have never allocated resources to undertake.

Rate selection in deregulated markets is a separate issue from billing accuracy — but the two are related. An organization that has never reviewed its rate classification in a regulated market is even less likely to have optimized its supply arrangement in a deregulated one.

The financial opportunity in deregulated markets varies significantly by state, customer size, and market conditions. In some cases, the supply savings available through competitive procurement exceed the billing error recoveries available through auditing. In others, the reverse is true. The optimal choices require analysis. The often-wrong answer is to default to whatever the utility assigned at account setup.