The United States is in the middle of one of the biggest wealth transfers of wealth it has ever seen since the deregulation of long distance calling. This shift in wealth is seen in the deregulation of energy. What is energy? Energy can be described multiple ways but for the purposes of deregulation, energy is defined as power that is transferred from the environment and converted into electricity and gas to be used for electricity and heating.
How does it work? Local utility companies own the grids that bring power to buildings. Prior to the new regulations, they would buy the gas and/or electricity from a source that produces for an undisclosed price, provide the building energy, then charge the responsible party for that energy. Considering the price that the utility company paid for the energy was undisclosed, consumers were paying a considerable mark up. For example: Electricity is measured in kilowatts. The utility company would purchase it from producer for $0.5/kilowatt, then sell it to the consume for $0.15/kilowatt. Consumers would pay the 300% mark up in addition to taxes and fees associated with being on a power grid. The utility companies had the power to choose where energy was purchased from. If the utility company was able to purchase at a low price, those savings were not necessarily passed on to the general public.
The government decided that these practices are not ethical and stepped in to make changes. With deregulation, consumers are now allowed to pick who the utility company purchases energy from. The utility company still owns the grids and still brings the energy to the building. The consumer can now choose which company based on lowest price. Competition within any industry drives prices down which means savings for the consumer and a more level playing field for up and coming producers.
How does this translate into wealth transferring? These unknown companies that produce energy need help with marketing. A lot of them have positioned themselves with direct sales companies to do this instead of spending large amounts of money on an advertisements and employees specializing in sales. The direct sales associates will acquire customers for the companies and in return, the companies pay a commission on the monthly bill from the consumer. The energy company does not have to pay a salary to employees to make cold calls and go door-to-door. Payments are only made after the sale. It's a win/win situation.
The deregulation of energy in the United States is beneficial to all who use it, which is everyone. Consumers get to save money. Utility companies are kept honest. Smaller companies are able to broaden their customer base which maintain job stability. Normal people, not just employees, are able to earn commission from acquiring customers for energy companies.
Fancy Free, LLC. would love to help you save money on your home and business utility bills. Contact us at (410) 929-0302 for your complimentary consultation.
No comments:
Post a Comment