What Is Energy Deregulation in the U.S.?

Energy deregulation gives consumers the power to choose their electric provider and plan. In regulated energy markets, the local utility company sells electricity to residents. In contrast, deregulated energy markets allow retail electric providers (REPs) to sell energy plans to customers. Deregulation opens customers up to an array of electricity options, but so many choices can be overwhelming. Choose Energy is a free marketplace designed to help you shop for energy plans near you. Enter your ZIP code to find today’s best providers and plans near you.

Energy deregulation allows retail electric providers to compete for your business. This means that deregulated areas typically offer more plan options at various prices. Put simply, energy deregulation means you have the freedom to choose the best energy plan for your needs.

Seventeen states and the District of Columbia currently have some form of electricity deregulation. Some states only offer natural gas deregulation, while others have both. Enter your ZIP code on Choose Energy to discover if your area offers deregulated energy plans.

Navigating a deregulated energy market can be confusing. That’s why Choose Energy wants to help you understand your options. Let’s start by explaining the difference between providers and utility companies.

• Retail electric providers (REPs): These may also be called energy providers or suppliers. These companies purchase electricity and sell it to you through an energy plan. Your REP is the company that you pay for your electricity plan. With Choose Energy’s free marketplace, you can compare a variety of energy providers and plans in your area and sign up for the best option.
• Utility company: You cannot pick your utility company because it is determined by where you live. Utility companies are responsible for delivering electricity to your home through power lines. They also maintain and service power lines. In regulated areas, consumers buy energy plans directly from the utility company. Some deregulated states allow you to choose between a plan from your local utility company and a handful of REPs.

There are two main documents to keep an eye out for when shopping, as they’ll help explain what you’re signing up for:

The Electricity Facts Label (EFL) is also called the Terms of Service (TOS) or a Disclosure Label. This document typically explains your rate, what energy sources the plan uses, and other key details. Make sure to thoroughly review this document before you sign up.

The Your Rights as a Consumer (YRAC) Disclosure or the Consumer Bill of Rights explains your rights and responsibilities. This document tells you what they are so you know if your rights have been violated. Among these rights are fair and non-discriminatory service, privacy protection, and clear contract terms, as well as slamming and cramming.

• Slamming happens when your electricity service is switched to a different plan or provider without your consent.
• Cramming happens when your energy provider adds an extra charge to your bill without informing you.

Utility regulators are government bodies tasked with setting delivery charges. Your electricity bill will include a charge for transmission and delivery from your utility company in addition to your energy rate and usage. These charges may be listed as:

• TDU: Transmission and distribution utility
• UDC: Utility distribution company
• TDSP: Transmission and distribution service provider

Utility regulators also manage complaints against utility companies and providers and oversee the energy system. Your utility regulator may be called one of the following:

• PUC: Public utility (or utilities) commission
• URC: Utility regulatory commission
• PSC: Public service commission
• PURA: Public utilities regulatory authority

Is energy deregulation a good thing?

Energy deregulation has pros and cons. One benefit is that consumers can choose their energy plan and may have more options than customers in regulated areas. However, energy deregulation can be confusing to navigate, and consumers have more responsibility to understand their options.

Is electricity cheaper in deregulated areas?

Electricity is not necessarily cheaper in deregulated areas because numerous factors affect electricity prices. However, consumers do have the option to choose their energy plan and shop for the best price. Enter your ZIP code on Choose Energy to find the cheapest rates in your area.

What states have deregulated energy?

Seventeen states and the District of Columbia have some form of deregulated electricity. The states with deregulated energy markets are Texas, Connecticut, California, Pennsylvania, Massachusetts, New Jersey, New York, Illinois, Delaware, Maine, Maryland, Michigan, New Hampshire, Ohio, Oregon, Rhode Island, and Virginia.