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Energy Deregulation and Your Small Business

Posted by SEPCO

12/17/13 9:30 AM

Energy deregulation is all about having the ability to choose your own electricity provider, rather than being forced to accept the rates of one local provider. As an individual, your primary benefit lies in the amount of money you can save, choosing the provider with the best offer. However, if you are the owner of a small business, energy deregulation can have an even greater impact on your business, affecting it a number of different ways.

To begin with, energy deregulation can help you and your small business save thousands of dollars on bills. Depending on the type of business you own or manage, your energy needs and required consumption may actually be above average, especially if it requires running large machinery and/or extended service hours. You may also be able to take advantage of green energy initiatives in your area. Paying less for electricity allows small businesses, which make up the backbone of the American economy, to remain active and continue providing their valuable goods and services. Statistics show that 8 out of 10 small businesses end up filing for bankruptcy, unable to cope with mounting operating expenses (including bills), on their own. Reduced rates on electricity can allow them to remain in business longer, keeping their budgets balanced and freeing up money that might be useful for expansion.

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Moreover, energy deregulation can also mean cheaper prices on the goods and services small businesses have to offer. When companies price a product, all costs involved in its production have to be taken into account, in order to strike a proper balance between affordability and actually turning a profit. If the price of energy is included in the final price of the product, lower energy costs could potentially bring these prices down. Ultimately, it's up to each business to decide whether or not they can afford to lower their prices and pass this savings down to the consumer or keep prices the way they are, to expand their profits. Lowering prices would naturally make them more competitive with other businesses that provide the same goods or services, attracting more customers. Another potential benefit to members of the local community is that they have two opportunities to save money. The first occurs when paying their own energy bills to a deregulated provider of their choice. The second opportunity comes when they purchase items or services from a small business that has reduced their own prices, in response to lower energy rates.

As it stands right now, the only problem with energy deregulation seems to be that not all states have adopted it. Currently, less than half of the states provide their residents with the opportunity to choose their own electricity provider. The situation is even worse with gas, which is fully deregulated in 19 states and only partially deregulated in 5 others. This means that customers in some states can take advantage of the various opportunities deregulation can provide, while others have to stick to the same regulations and consequently, pay more for their energy.

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All in all, energy deregulation is a great opportunity, which itself offers additional opportunities to both individual customers and small businesses. In an age where jobs and economic stability often stand on shaky ground, it's essential for every state in the land of opportunity to take a better look at the benefits of energy deregulation. The advantages of allowing their residents to freely choose where they get their own energy extend not only to each individual, but also to the small businesses upon which the American economy depends.

Yogesh Mankani is a small business consultant. He loves to share unusual and informative tips on small business blogs.

Img Src: iConnectEnergy.com and USPowerandGas.com

Topics: Alternative Energy

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