A Light Switch

Students are constantly laden with monetary burdens: the monthly rent check, periodic tuition bills and the ever-dependable textbook costs. In off-campus housing, students also are responsible for paying utility costs, including heat and light. Students clearly want warm houses and adequate light, but most residents aren’t aware they can choose who provides this energy, if they are not in a landlord-controlled situation.
Direct Energy, one of North America’s largest energy service providers, launched a program to introduce Michigan to their company and remind Michigan residents they have a choice. Many people in Michigan are tired of continued rate increases and inferior customer service, and with deregulation, people have the right to choose and switch energy providers. With the emergence of deregulation within energy providers comes a new Refer a Friend Program. By referring your family and friends to switch to Direct Energy, there will be a $25 reward for you and your friends for each referral. With Direct Energy, you can lock in a rate guaranteeing price protection (your current energy provider cannot offer you a fixed price or price protection), and even make money this semester by referring a friend.
So what does this mean for MSU students? For students committed to long-term leases with many renting companies in the area, the choice for energy provider may be pre-determined. However, with some off-campus houses or permanent residences, energy providers can be chosen by the individual residents. Even if students can’t benefit personally from lower costs until they graduate, friends, family, relatives and teachers can. And students can make a little extra cash through the $25 reward for each referral.
Just like students shop around for car insurance or student loans, they can shop around to find the company and product that best fits their electricity needs. State-by-state, energy is now being deregulated, giving consumers a choice for their gas and/or electricity needs. For years, energy companies operated as a monopoly, supplying and delivering energy. But with deregulation, the supply portion is open to competition in states like Michigan. People are making the decision to switch energy providers, choosing to avoid being confined to their energy utilities that may force rate increases or offer inferior customer service.
The initial actions leading to deregulation began in 1978, when the Public Utility Regulatory Policies Act (PURPA) made it possible for non-utility generators to enter the wholesale power (electricity) market by building independent power generating facilities. In 1992, Congress voted to promote greater competition in the bulk power market with the passage of the Energy Policy Act.
Deregulation also promotes new technology. Companies have more incentive to develop and introduce innovations because they can profit from those that succeed. Ideally, deregulation will result in increased efficiency and dollar savings over the long term. Under competition, companies have to find innovative ways to attract customers such as fixing costs over time, offering variable rates more closely aligned with the current market price and providing superior customer service. In deregulated states, you can shop for energy service companies who are offering great rates and competing for your business. Your current company is still responsible for delivering the energy using your current wires and pipes and they will still respond to electric and gas emergencies.
The deregulation and opening of energy markets to competition has the potential to bring substantial benefits to energy consumers, particularly through greater choice among energy supply options, including renewable energy sources. An increase in the reliability of energy supplies will be inevitable because deregulating industries attract new investment capital that can be used to expand and improve their infrastructure. Additionally, deregulating industries typically see an increase in the numbers of companies offering the product or service. As a consequence, deregulation may increase the number of back-up suppliers if one company experiences problems. Ultimately, the consumer benefits from greater choice and ability to manage costs. Students now can have a choice in energy providers in many off-campus living situations, and the draw of a cash reward for referring others isn’t a bad incentive, either.

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