Deregulation Affecting the Small Business
“Electricity Deregulationâ€. This term has been spreading through the business community for the last eight years. What is it and how does it affect you? Can you save money? Is there a connection between deregulation and Con Edison’s power outage? The whole concept of deregulation seems overwhelming. However, deregulation is not new; you probably remember the deregulation of airline travel and long distance telephone service.
Deregulation had no impact on the power outage. In fact, Con Edison no longer owns the large power plants in New York City. They were required to sell them when deregulation began. So, just like a third party supplier, Con Edison must buy electricity to sell to their customers.
What deregulation allows you to do is to purchase electricity from a third party supplier other than Con Edison. How does this work? The third party supplier will bill the customer for their actual electricity usage. Con Edison will bill the customer for delivering that electricity. Savings from this “two-bill†system are likely; Con-Ed’s portion of the bill is no longer taxable because Con Ed is not providing electricity, just transporting it. Since tax rates in New York City are as high as 8.375%, commercial customers gain true savings. One option is SmartChoice energy which guarantees savings.
Chang Yong, a manager of a downtown delicatessen, has been using a third party supplier of electricity for 2 years. He said, “Con Ed bills are high,†and, “If switching to a third party saves me money, I have no problemâ€. He is very happy with his two-bill system and says, “They handle everything for me. I trust them.â€
Deregulation has often been a hot topic for larger businesses. Many of them made the switch years ago. So, why haven’t many small business owners joined this phenomenon? Smaller businesses may be unaware of the concept of deregulation, and therefore have been missing out on these savings.
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