Regulated utilities
In regulated areas, consumers can only receive electricity from their local utility company. This means the utility company is responsible for every step in the energy process – from power generation to sales to delivering energy to the consumer. The public utilities commissions oversee each step in this regulated process as well and set rules for the rates electricity companies can charge for energy service.
- Regulated system. In this energy market, utility companies both sell and deliver energy – and are the only companies allowed to do so.
- Regulated PUC. This is the governing authority that oversees and regulates the rates your utility company can charge for energy service, including supply and delivery fees.
Deregulated utilities
In deregulated areas, utility companies are no longer solely responsible for selling energy to consumers. Energy consumers in deregulated areas can also purchase electricity from retail electric providers (also called REPs, suppliers, and ESCOs). In some areas, consumers are required to purchase energy from an REP. In other areas, consumers can choose to remain with their utility company or choose a different REP. For more information about the type of system in your area, find your state here.
- Deregulated system. There are two types of deregulated systems. In one system, the utility company still sells electricity, but is in direct competition with retail electric providers (REPs). In the second type of system, the utility company does not sell electricity and consumers must choose an REP. In both systems, the utility company still delivers the energy to consumers.
The role of the PUC changes in deregulated areas, too. The point of a deregulated system is that market competition keeps energy rates in check. So, in theory, this would mean that there is no need for PUC oversight. But utility companies are still responsible for delivering energy to consumers, whether you choose an REP or not. You’ve probably seen the delivery charges listed on your utility bill as UDC, TDU, or TDSP charges. Public utilities commissions set this delivery fee in deregulated areas so it remains consistent between all utility companies. Some PUCs also manage consumer complaints, depending on your state.
- Deregulated PUC. Supply rates are regulated by market competition, so the PUC only oversees delivery rates. Some PUCs also handle consumer complaints against utilities and REPs.