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History of Deregulation in New York

Learn about New York’s deregulated utility markets for commercial and residential electricity services.

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Deregulation in NY - History of Deregulation in New York

New York is one of several states in the U.S. that has deregulated its utility market for both commercial and residential electricity services. Instead of only having one choice for home and business energy services, residents of NY choose from different companies when signing up for a new electricity account.

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When did deregulation in NY start?

In the 1990s, New York residents and businesses were faced with some of the highest electricity rates in the US. At the time, many states in the US were faced with similar challenges. Outdated equipment, fluctuating demand, and aging infrastructure throughout the country resulted in reduced service quality and increased rates for customers. For customers in NY, these rates were rising through the roof, and it was challenging for both commercial and residential customers to keep up with their bills each month.

By 1997, the state of New York was ready to open the utility market up in order to attract competition. NY initially allowed a few electric and gas companies to launch pilot programs for large power customers, and by the early 2000s, all customers could choose their utility provider from several different Independent Power Producers (IPP).

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Why Deregulation?

Since deregulation was implemented, the state of NY has generated over 1700 MW of renewable energy, increased fuel diversity and has improved power plant efficiency. Public demand for deregulation helped drive a major restructuring of the utility market in New York. Through deregulation, the state could dissolve the monopoly that had long controlled utility rates and service quality, and introduce competition into the market. Part of this process included restructuring the utility companies themselves to dissolve their control over the transmission and generation of energy.

As a result of this restructuring and deregulation process, utility customers in NY can now choose from over 200 alternative and Energy Service Company (ESCO) options. These companies all compete for business and regularly offer various levels of perks to customers, such as savings on energy efficient appliances and clean energy credits. This competition has helped decrease energy prices throughout the state, and has also helped increase the popularity of alternative energy sources, including wind power and solar energy production.

How Does Deregulation Impact Utility Services in NY?

Deregulating the utility market in New York didn’t change the actual services that are offered, it just opened up the market to competition from other providers. Today, NY utility services are the same no matter where you go, but customers can choose from several different providers when signing up for electricity services. Each company sets its own default price, making it possible for customers to shop around for the best rates in their area.

In addition to shopping for better rates, NY energy deregulation enabled consumers to now shop around for renewable energy sources like Community Solar. With solar projects throughout New York State, companies like Clearway Community Solar are making it easier for customers to participate in clean, renewable energy without the need for rooftop solar panels on their home. Instead, homeowners and renters alike can earn solar credits based on the amount of energy that their participating solar farm sends to their local grid.

Do you live in a different state? Check out the impact of deregulation in Illinois and the history of Massachusetts energy deregulation.

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