Electricity deregulation explained
Last updated 2026-10-21
In deregulated ("retail choice") states, you can buy the electricity itself from a competing supplier while your local utility keeps delivering it. About a third of states offer some form of choice. Here is how it works and how to switch without getting burned.
1. Supply vs. delivery
Supply (you can shop)
The electricity itself: generation, and in some states transmission and capacity. Sold by the utility's default service or by a competitive supplier (called a REP in Texas, an ESCO in New York).
Delivery (you can't)
Poles, wires, meters, outage repair and customer charge. Always billed by the local utility at regulated rates, no matter who supplies you.
Supply is typically a third to three quarters of the per-kWh price, depending on the state, so even a big supply discount is a smaller saving on the total. In Texas, retail providers bundle delivery (TDU) charges into their price, so you compare all-in prices. See Texas electricity plans.
2. States with retail choice
| State | Choice | Official comparison / regulator | Notes |
|---|---|---|---|
| Connecticut 27.99¢/kWh avg. | Yes | energizect.com | Eversource and United Illuminating customers can choose a supplier. |
| Delaware 17.79¢/kWh avg. | Yes | depsc.delaware.gov | Delmarva Power customers can choose a competitive supplier. |
| District of Columbia 24.20¢/kWh avg. | Yes | dcpsc.org | Pepco customers can choose a competitive supplier. |
| Illinois 18.79¢/kWh avg. | Yes | pluginillinois.org | ComEd and Ameren Illinois customers can choose a retail supplier; many towns run municipal aggregation. |
| Maine 29.31¢/kWh avg. | Yes | maine.gov/mpuc | Customers can buy supply from a competitive provider; the utility only delivers power. |
| Maryland 21.03¢/kWh avg. | Yes | psc.state.md.us | Customers of investor-owned utilities can choose a competitive supplier. |
| Massachusetts 30.43¢/kWh avg. | Yes | energyswitchma.gov | Customers of investor-owned utilities can choose a supplier; many towns run municipal aggregation. |
| New Hampshire 26.67¢/kWh avg. | Yes | puc.nh.gov | Customers of the state's regulated utilities can choose a competitive supplier or community power program. |
| New Jersey 23.78¢/kWh avg. | Yes | nj.gov/bpu | Customers of all four electric utilities can choose a third-party supplier. |
| New York 28.39¢/kWh avg. | Yes | dps.ny.gov | Customers of the state's investor-owned utilities can buy supply from an energy service company (ESCO). |
| Ohio 18.25¢/kWh avg. | Yes | energychoice.ohio.gov | Customers of investor-owned utilities can choose a competitive supplier or join a community aggregation. |
| Pennsylvania 20.70¢/kWh avg. | Yes | papowerswitch.com | All customers of investor-owned utilities can buy supply from a competitive supplier. |
| Rhode Island 29.27¢/kWh avg. | Yes | ripuc.ri.gov | Rhode Island Energy customers can choose a competitive supplier. |
| Texas 15.96¢/kWh avg. | Yes | powertochoose.org | Most of Texas (the ERCOT market outside co-op and municipal areas) chooses a retail electric provider; the local utility (TDU) delivers power. |
| California 32.99¢/kWh avg. | Limited | — | Homes can't choose a retail supplier, but many communities buy power through a Community Choice Aggregator (CCA). |
| Michigan 21.05¢/kWh avg. | Limited | michigan.gov/mpsc | Retail choice is capped at 10% of each utility's sales, so most homes buy from their utility. |
| Oregon 15.50¢/kWh avg. | Limited | — | Retail choice is available to nonresidential customers only. |
| Virginia 16.48¢/kWh avg. | Limited | — | Choice is limited to large customers and 100% renewable offerings; most homes buy from their utility. |
Average rate = all residential customers, last 12 months (EIA). Co-ops and municipal utilities are usually exempt from choice even in deregulated states. Browse suppliers and averages on compare providers.
3. The price to compare
The price to compare (PTC) is the utility's default supply price per kWh. It is printed on the bill in Pennsylvania, Ohio and several other states, and posted on state shopping sites.
- An offer saves money only if it is below the PTC for the whole contract term.
- Default service prices change on a schedule, often every 3, 6 or 12 months, as the utility buys power through auctions. A good offer today may be above the PTC next season, or the reverse.
- Check what the PTC includes. In some states it includes transmission; compare like with like.
Quick test: (PTC − offer price) × your monthly kWh = monthly saving. At 900 kWh, a 1¢ difference is $9 a month or $108 a year.
4. Fixed, variable and teaser rates
| Plan type | How price behaves | Verdict |
|---|---|---|
| Fixed rate, 12 to 36 months | Same supply price for the term | Safest choice. Note the end date. |
| Variable / month-to-month | Supplier can change price monthly, usually with little notice | Avoid unless you check monthly |
| Introductory / teaser | Low rate for 1 to 3 months, then variable | The main way households overpay |
| Indexed | Tied to a wholesale price formula | Exposed to price spikes |
| Renewable / green | Fixed or variable, with renewable energy certificates | Compare price and the % renewable |
- Cancellation fees: commonly $0 to $200, sometimes a per-month-remaining fee. Many states ban fees for moving out of the service area.
- Renewal: most contracts auto-renew to month-to-month variable pricing at the end of the term. Suppliers must send renewal notices; read them.
- Monthly fees: a $5 to $10 supplier fee can wipe out a small rate discount.
5. Municipal aggregation and CCAs
A town or county buys supply in bulk for all residents, who are enrolled automatically and can opt out. It is common in Ohio, Illinois, Massachusetts, New York, New Jersey, New Hampshire and Rhode Island. California's community choice aggregators (CCAs) work the same way and serve millions of homes; the utility (PG&E, SCE, SDG&E) still delivers and bills, and adds a "PCIA" exit fee.
Aggregation prices are often fixed for a year or more and come with no cancellation fee, but they are not always below the default price. Compare the aggregation rate to the PTC each time it renews.
6. Scams and traps
- Door-to-door and phone sales claiming to be "from the utility", offering a "rebate" or asking to "check your bill". Utilities do not sell supply plans door to door. Never show your bill or account number to an unsolicited caller.
- Slamming: being switched without consent. Check the supplier name on each bill.
- "Guaranteed savings" claims that compare against an old rate or apply for only one month.
- Variable plans sold as "no contract": no contract also means no price protection.
Most choice states give you a rescission period after enrolling, typically 3 to 10 days, to cancel without penalty. If you were switched without consent, call the utility to return to default service and file a complaint with the state commission.
7. How to switch, step by step
- Find your price to compare on your bill or the state site above, and your average monthly kWh.
- Shop on the official state site (listed in the table), not a search ad.
- Filter to fixed rate, 12 months or longer, no monthly fee.
- Read the contract summary: price per kWh, term, cancellation fee, renewal terms, any fee.
- Enroll with the supplier (online or phone). You need your utility account number.
- Expect a confirmation letter from the utility. The switch takes effect at your next meter read, usually within 1 to 2 billing cycles.
- Put the contract end date in your calendar and shop again 30 to 60 days before it.
See current averages by state on electricity rates and by supplier on compare providers.
Frequently asked questions
Which states have electricity deregulation?
Homes can choose a supplier in Connecticut, Delaware, District of Columbia, Illinois, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas. Choice is limited in Michigan (capped at 10% of load), Virginia (large customers and 100% renewable offers), California (community choice aggregators, not individual choice) and Oregon (nonresidential only).
Does switching suppliers change who I call for outages?
No. Your local utility still owns the wires, reads the meter, restores power and usually sends the bill. Only the supply line on the bill changes.
Is switching electricity suppliers worth it?
It can be, if you pick a fixed rate below the utility's price to compare and set a reminder before the contract ends. Studies by regulators in several states have found many residential customers on supplier plans paid more than default service, mostly because of variable rates after an intro period. Read the contract.
Can a supplier cut off my power?
No. A supplier can drop you for non-payment, which returns you to the utility's default service. Only the utility can disconnect service, under state rules. In Texas, your retail provider can request disconnection for non-payment through the utility.