Deregulated Electric Market Overview
Deregulated electric markets are designed to give customers options for electric and natural gas service. At a high level, the electric supply system in deregulated markets is made up of three entities working together to provide your service. Each individual group is responsible for a portion of the overall cost of electricity for the customer.
The electric supplier is the entity that provides the actual electricity. Electricity can be generated in a number of ways including coal, nuclear and wind energy. The cost of this energy represents approximately 65 to 70 percent of your overall cost and is largely determined by wholesale markets that trend higher or lower based on supply and demand, weather or other related factors. As an electric supplier, MidAmerican Energy Services works with a variety of wholesale suppliers to maximize opportunities for our customers.
Regional Transmission Organization
Regional transmission organizations are responsible for overseeing the markets and ensuring reliability. RTO charges typically account for about 15 percent of your overall electric costs and may be line itemed separately or built into a single, all-inclusive price.
- Transmission costs are those associated with transporting electricity from the supplier to the utility's distribution area. (Transmission is included in the distribution charges in the Texas-ERCOT markets.)
- Ancillary costs are administrative costs associated with overseeing markets and providing transmission services.
- Capacity costs are the costs of ensuring reliability of the network - making sure there is adequate supply to meet demand.
- Losses costs compensate for the lost energy as it moves through the poles and wires from the generator to the customer.
Once electricity is transported from the generator, it is delivered to the end-use customer through the utility’s distribution network. Distribution charges account for approximately 10 to 15 percent of your overall electric costs and are consistent, regardless of your supplier.