Electricity Deregulation

Electricity deregulation means the state allows consumers to choose their electricity supplier instead of being limited to the local utility monopoly. The utility still delivers the power over its wires, but you pick the company that generates or procures the electricity and sets the supply rate on your bill.

18 states plus Washington D.C. have some form of retail electricity choice — 19 jurisdictions in total. However, the degree of access varies widely. Texas has a fully competitive mandatory-choice market with 87% switching. Ohio's government aggregation programs have pushed residential switching to 57%. On the other end, Michigan caps participation at 10% of retail sales, Virginia has largely closed its competitive market to new switching, and California suspended residential direct access entirely in 2001.

Deregulation introduces competition, which can lower prices — especially for commercial and industrial customers who actively shop and negotiate. Residential savings depend on engagement: customers who compare and switch plans typically pay 10–20% less on the supply portion of their bill. In Texas, the competitive market has kept supply rates below the national average for much of the past decade. In Ohio, aggregation programs have created strong competitive pressure on suppliers. However, passive customers who stay on default utility rates may see little difference.

If your state is deregulated and your area is served by a participating utility, yes. Enter your ZIP code on ElectricChoice to see available plans and providers. Some states only allow commercial and industrial customers to choose (Oregon, California, Nevada). Michigan imposes a 10% cap that's fully subscribed with a long waitlist. Virginia has largely closed its competitive market — only customers with demand exceeding 5 MW are eligible.

No. Switching electricity suppliers does not cause any interruption in service. The local utility continues to deliver power over the same wires. The only thing that changes is the supply portion of your bill — it comes from your chosen provider instead of the utility's default supply. The transition typically takes 1–2 billing cycles.

The switching rate is the percentage of eligible customers in a deregulated market who have moved from their utility's default supply to a competitive retail provider. A higher switching rate generally indicates a more active and competitive market. Texas leads with 87% (mandatory-choice market), Ohio follows at 57% (driven by government aggregation), and Pennsylvania is at 35%. States with low switching rates may have fewer supplier options, less consumer awareness, or regulatory barriers that limit participation.

Yes. Texas has the most competitive deregulated electricity market in the United States. Since 2002, residents and businesses in ERCOT territory have been required to choose a retail electricity provider — there is no default utility supply. With 100+ competing suppliers and an 87% switching rate, Texas offers more plan options than any other state.

California's electricity market is partially deregulated. Residential direct access has been suspended since 2001 following the energy crisis. Commercial and industrial customers can participate through Direct Access, but under a statewide cap of approximately 28,800 GWh with a long waitlist. Separately, 25+ Community Choice Aggregation (CCA) programs serve millions of California customers under different regulatory rules.

Yes. Ohio deregulated electricity in 1999 and has one of the most active residential markets in the country. Government aggregation programs have driven the residential switching rate to 57%. Over 70 PUCO-certified competitive retail electric service (CRES) providers operate in Ohio.

Yes. New York deregulated electricity in 1996. Residential and commercial customers can choose an Energy Service Company (ESCO) to supply their electricity. The market has over 100 Community Choice Aggregation programs and is overseen by the Public Service Commission. The residential switching rate is 15%, partly due to PSC restrictions on residential ESCO marketing.

Yes, natural gas is deregulated in many of the same states that have deregulated electricity, plus a few additional states. Georgia, for example, has full residential natural gas choice but remains regulated for electricity. In deregulated gas markets, you can choose a gas supplier while the local utility continues to deliver the gas through its pipeline network. At least 16 states plus D.C. offer some form of natural gas choice.

States with full residential and commercial gas choice include Georgia, Ohio, New York, Pennsylvania, New Jersey, Maryland, Illinois, Connecticut, Massachusetts, Rhode Island, Delaware, New Hampshire, Maine, Virginia, and Washington D.C. Georgia is notable as the only state with fully deregulated gas but regulated electricity.

A utility owns and maintains the physical infrastructure — the power lines, transformers, and meters that deliver electricity to your home. A supplier (also called a retail electricity provider, ESCO, or CRES) generates or procures the electricity that flows over those wires. In deregulated markets, you choose your supplier while the utility continues to handle delivery and billing. See our guide to supply vs. delivery rates for more detail.

Community Choice Aggregation is a program where a local government aggregates the buying power of residents and businesses to negotiate electricity supply contracts — often with higher renewable energy content. CCA is active in California, New York, Massachusetts, Illinois, Ohio, and other states. Customers are typically enrolled automatically on an opt-out basis and keep their existing utility for delivery.

The main risk is choosing a variable-rate plan that could increase when market prices rise. Fixed-rate plans eliminate this risk by locking in your supply rate for a set term. Other potential issues include early termination fees if you cancel before your contract ends. There is no risk to your power reliability — the utility delivers electricity regardless of which supplier you choose.

Switching typically takes 1 to 2 billing cycles (4 to 8 weeks) from the date you enroll with a new supplier. The process happens automatically — your new supplier notifies the utility, and the switch occurs at your next meter read. There is no interruption to your electricity service during the transition.

Yes. In all deregulated states, you can return to your utility's default supply rate (called "standard offer," "price to compare," or "provider of last resort" depending on the state). The process works the same way as switching to a competitive supplier and typically takes 1–2 billing cycles. There is usually no fee for returning to default service.

ESCO stands for Energy Service Company. In New York and some other deregulated states, ESCOs are competitive suppliers that sell electricity (and sometimes natural gas) to residential and commercial customers. ESCOs are licensed by the state and compete with the utility's default supply rate. In other states, similar companies may be called retail electricity providers (REPs), competitive retail electric service (CRES) providers, or alternative energy suppliers (AES). See our providers directory for a list of competitive suppliers.