The Complete List of Deregulated US States in 2024 [Electricity & Gas]
In 1978, the Public Utility Regulatory Act was passed. It enabled states to choose how electricity and natural gas were to be delivered to their residents. This act paved the way for energy deregulation, unique energy, and natural gas delivery method. This method enables privately-owned companies to enter the energy markets and offers cheap deregulated electricity. It also enables citizens to choose their energy services and energy delivery company.
What Is Energy Deregulation?
Energy deregulation is a unique model of energy services where electricity and natural gas are offered by multiple companies in the same area. The utility companies (or providers) compete among themselves to offer the best service and the most reliable energy service to both commercial and residential consumers. While some states have deregulated electricity or natural gas only, some have deregulated both and have enabled a fair energy market where energy costs can be kept at a minimum.
History
In its early days, all electricity and gas markets in the US were deregulated. Electricity was something new, and there was no need to regulate it because the utility companies were small. So, having a local utility in every area expands by its own means was better and brought electricity to many much faster than the country ever could. However, as the network and the number of residential and commercial consumers increased, problems arose.
Unreliable electricity markets started appearing, with blackouts and brownouts being a normal part of the day. It was not until the utility companies established monopolies in their service areas that the need to regulate the energy market arose. The companies that held monopolies in certain areas started charging higher power rates since they were the only energy suppliers covering large areas.
As a response to the energy crisis, the US introduced means to combat energy monopolies: the NERC (North American Electric Reliability Council)) was created and has divided the USA into ten energy regions. This allowed for more standardization and improved the power grid, the infrastructure, and the quality of the electricity market itself. Every local utility company now had to make sure that the standards of the regulated energy markets were respected. However, the energy monopolies persisted, and the prices remained high.
As a response to this, the Federal Government introduced the FERC (Federal Energy Regulatory Commission), which has allowed the states to choose whether they wanted to keep a regulated energy market or introduce energy deregulation laws. These laws allowed private companies to come into the energy markets and start competing with affordable electricity and natural gas rates. Every electricity provider started competing with all other companies, and the result was an energy market with many benefits for the consumers.
Benefits
The benefits of deregulated markets are many. They include the power to choose, better rates and service, green energy options that both commercial and residential customers could choose from, as well as enhanced services that every energy provider offers. The national grid went from a sore to national pride.
Power To Choose
Power to choose is the most notable difference between regulated and deregulated energy markets. The power to choose means that residential customers can choose their energy provider. Every customer could also choose their natural gas choice as well. This gave people more control over their bills and has incentivized utility companies to start offering more competitive energy services and better rates.
Better Rates and Service
Better rates and services are a natural outcome of deregulated energy markets. As electricity and natural gas delivered by every single provider are the same, it is only the prices and the quality of service that could make one company stand apart from its competition. As more and more companies could enter the energy market, innovations were introduced, such as progressive charges, green energy plans, and enhanced services.
Green Energy Option
Green energy plans have become the hallmark of the deregulated energy market in the 21st century. As the consequences of pollution and climate change become more apparent, more residential and commercial customers make the energy choice in the right direction and choose renewable energy. As the green energy options became more popular, the renewables sector grew as well, keeping the American economy ticking with large-scale solar farms and wind farms.
Enhanced Services
Yet another benefit of a deregulated energy market includes all non-essential services provided by energy providers. These services are supposed to augment your experience as a customer and make the electricity plans offered by the provider more competitive in the market. Some enhanced services offered by energy providers in deregulated electric markets include:
- Free nights and weekends,
- Smart thermostats,
- Free energy audits,
- Free energy-saving advice,
- The ability to buy electricity at fixed or variable rates,
- The ability to choose renewable energy only,
How Does Deregulated Energy Market Work?
If you are a residential customer and live in a deregulated energy market, you can generally choose if you want to purchase your electricity from a power provider or a state-owned utility company. As the electricity you’re purchasing is the same, the pricing and the quality of service are the most important factors to consider when making a decision.
As power providers purchase electricity in the wholesale energy market, they get the electricity at a somewhat lower price than they sell it to you. This means that they can include freebies and enhanced service to you. It is up to you, as a residential customer, to choose which combination works the best for you.
The sheer competition in the market has led the power companies to offer better service and a variety of energy plan types to ensure rapid expansion into the market and start offering their electric and utilities services to a wide number of people. The types of energy plans offered in the deregulated energy market are:
- Fixed-rate energy plans,
- Variable-rate energy plans,
- Green energy plans (renewable energy plans),
- No-deposit energy plans, as well as
- Special customized energy plans for commercial customers.
Every energy plan offered by a power provider or a retail energy provider (REP for short) can be taken up for a fixed period of time, usually anywhere between one and 60 months. If you decide to end a contract early, there is an early termination fee to be paid. Furthermore, incentives exist for customers with high energy usage, and this applies to both electricity and natural gas deregulation.
Is It Affected By Energy Rates?
An energy market that is deregulated works by offering electricity at certain tariffs. In both regulated and deregulated markets, only the state can approve or disapprove of an energy rate offered to consumers. This means that although the state does not have a say in how the prices are formed, it has an observatory role and ensures fair pricing and access to utilities for all.
Energy Deregulated States
Of course, not all states have decided to deregulate their energy markets. Although the Public Utility Regulatory Act was passed in 1978, it was not until the 1990s that the first states decided to deregulate their energy markets. Some states have deregulated electricity only. Some offer gas choice only, while some have introduced deregulation to both electricity and natural gas.
Furthermore, some states, especially those that have multiple local utility companies managing the power grid, have chosen to deregulate only portions of their territory. Some have deregulated only some utilities, while some have decided to deregulate only commercial or industrial customers. This may sound a bit confusing, so we’ve decided to help. Here is a list of all deregulated areas, including the level of deregulation they offer:
| State | Residential Electricity Deregulation | Commercial Electricity Deregulation | Industrial Electricity Deregulation | Natural Gas Deregulation |
|---|---|---|---|---|
| Alabama | ❌ | ❌ | ❌ | ❌ |
| Alaska | ❌ | ❌ | ❌ | ❌ |
| Arizona | ❌ | ❌ | ❌ | ❌ |
| Arkansas | ❌ | ❌ | ❌ | ❌ |
| California | Partial Choice | Partial Choice | Partial Choice | ✅ |
| Colorado | ❌ | ❌ | ❌ | ❌ |
| Connecticut | ✅ | ✅ | ✅ | Partial Choice |
| Delaware | ✅ | ✅ | ✅ | ❌ |
| Florida | ❌ | ❌ | ❌ | ❌ |
| Georgia | ❌ | ❌ | ❌ | ❌ |
| Hawaii | ❌ | ❌ | ❌ | ❌ |
| Idaho | ❌ | ❌ | ❌ | ❌ |
| Illinois | ✅ | ✅ | ✅ | ✅ |
| Indiana | ❌ | ❌ | ❌ | ❌ |
| Iowa | ❌ | ❌ | ❌ | ❌ |
| Kansas | ❌ | ❌ | ❌ | ❌ |
| Kentucky | ❌ | ❌ | ❌ | ❌ |
| Louisiana | ❌ | ❌ | ❌ | ❌ |
| Maine | ✅ | ✅ | ✅ | Only for Commercial and Industrial Customers |
| Maryland | ✅ | ✅ | ✅ | ✅ |
| Massachusetts | ✅ | ✅ | ✅ | ✅ |
| Michigan | Partial Choice | Partial Choice | Partial Choice | ✅ |
| Minnesota | ❌ | ❌ | ❌ | ❌ |
| Mississippi | ❌ | ❌ | ❌ | ❌ |
| Missouri | ❌ | ❌ | ❌ | ❌ |
| Montana | ❌ | ❌ | ❌ | ✅ |
| Nebraska | ❌ | ❌ | ❌ | ❌ |
| Nevada | ❌ | ❌ | ❌ | ❌ |
| New Hampshire | ✅ | ✅ | ✅ | Only for Commercial and Industrial Customers |
| New Jersey | ✅ | ✅ | ✅ | ✅ |
| New Mexico | ❌ | ❌ | ❌ | ❌ |
| New York | ✅ | ✅ | ✅ | ✅ |
| North Carolina | ❌ | ❌ | ❌ | ❌ |
| North Dakota | ❌ | ❌ | ❌ | ❌ |
| Ohio | ✅ | ✅ | ✅ | ✅ |
| Oklahoma | ❌ | ❌ | ❌ | ❌ |
| Oregon | ❌ | ✅ | ✅ | ❌ |
| Pennsylvania | ✅ | ✅ | ✅ | ✅ |
| Rhode Island | ✅ | ✅ | ✅ | ✅ |
| South Carolina | ❌ | ❌ | ❌ | ❌ |
| South Dakota | ❌ | ❌ | ❌ | ❌ |
| Tennessee | ❌ | ❌ | ❌ | ❌ |
| Texas | ✅ | ✅ | ✅ | Only for Commercial and Industrial Customers |
| Utah | ❌ | ❌ | ❌ | ❌ |
| Vermont | ❌ | ❌ | ❌ | ❌ |
| Virginia | ❌ | ❌ | ❌ | ❌ |
| Washington | ❌ | ❌ | ❌ | ❌ |
| Washington D.C. | ✅ | ✅ | ✅ | ✅ |
| West Virginia | ❌ | ❌ | ❌ | ❌ |
| Wisconsin | ❌ | ❌ | ❌ | ❌ |
| Wyoming | ❌ | ❌ | ❌ | ❌ |
Map of Energy Deregulated States
For easier navigation and a better idea of which states have an energy deregulated status, here is a map of energy deregulated territories and states:
*Needs Graphic Image*
States With Energy Deregulation Only
Some states have decided not to deregulate their natural gas market. Deregulation itself is a lengthy process with many obstacles to overcome, and since no two states are the same, simply copying the path one state has taken does not guarantee good results. For this reason, many states have decided to deregulate their energy market only. These are the US states with energy deregulation only:
States With Energy and Gas Deregulation
On the other hand, some states have deregulated both their natural gas and energy industries. Since deregulation is a complex process, only some states have decided to take this step. Another reason to do this is that deregulation can break down unfair practices and increase competition in the market. The following US states have deregulated natural gas and electricity:
- California
- Illinois
- Maryland
- Massachusetts
- Michigan (Partial Choice for Energy Deregulation)
- New Jersey
- New York
- Ohio
- Pennsylvania
- Rhode Island
- Washington D.C.
States With Only Gas Deregulation
Some other states have decided to leave the energy industry and focus on achieving deregulated natural gas. In these states, the state-owned utilities distribute energy, while the deregulated gas is distributed by a number of companies. Here, residential customers can enjoy competitive pricing and enhanced services.
It is important to note that not all gas deregulated states are fully deregulated. Some of these states with deregulated gas only allow deregulation with some utilities, while others rely on geographic segmentation or even the type of customer: residential, commercial, or industrial. Here is the breakdown of natural gas deregulated areas, including the deregulated territory:
| State | Gas Utilities with Deregulated Territory |
|---|---|
| California | Pacific Gas and Electric, San Diego Gas and Electric, and Southern California Gas. |
| Florida | Central Florida Gas |
| Georgia | Atlanta Gas Light |
| Indiana | NIPSCO |
| Kansas | Kansas Gas Service: Only for Commercial and Industrial Customers |
| Kentucky | Columbia Gas |
| Montana | Northwestern Energy, Energy West Montana |
| Nebraska | Limited by Time: the Switch Must Take Place in April |
| New Mexico | Deregulated, but Limited |
| West Virginia | Peoples Gas West Virginia, Dominion Energy West Virginia, Consumers Gas Utility, Mountaineer Gas |
| Wyoming | Black Hills Energy - Limited by Time: the Switch Must Take Place in April |
States Without Energy Deregulation
There are some states that kept both their electricity and natural gas regulated. Here, the national grid is always operated by the utility, and electricity is delivered by the same company. In states like these, the utility territories overlap with each company’s service territory, and there is no increase in competition:
- Alabama,
- Alaska,
- Arizona,
- Arkansas,
- Colorado,
- Hawaii,
- Idaho,
- Iowa,
- Louisiana,
- Minnesota,
- Mississippi,
- Missouri,
- Nevada,
- North Carolina,
- North Dakota,
- Oklahoma,
- Oregon,
- South Carolina,
- South Dakota,
- Tennessee,
- Utah,
- Vermont,
- Washington, and
- Wisconsin.
How To Shop for Electricity?
If you happen to live in a deregulated state and a deregulated territory within, you can shop for electricity. However, this is not an easy task, especially since the increased competition can make the energy choice a hard one to make. Furthermore, states with deregulated markets rarely have solutions such as Electricrate to help guide you through the process and pick the bad from the good power providers. However, there are a few simple steps to consider before shopping for electricity:
- How much electricity do you use every month,
- When do you use most of your electricity,
- Do you plan to stay at the same address for a long or a short period,
- What energy source do you want (renewable vs nonrenewable),
- Is there a deposit to be placed prior to service initiation,
- If there is an easy cancellation fee to be paid if you end the contract prematurely.
Finding An Electric Company Near You
Finding an electric company in states with deregulated energy markets is not as easy as it sounds. Manually browsing for retail energy suppliers and comparing their offers can take days to finish, with no guaranteed results. However, Electricrate offers this same service in a free-to-use, streamlined platform. Simply enter your ZIP code, narrow down the results by contract term, source of energy, and the type of energy plan, and browse energy plans in a standardized way.
FAQs
How does Energy company work?
An energy company works by purchasing electricity on the wholesale market and selling it to you at a markup. The quantity of power they should purchase every day is equal to the aggregate demand of all their customers. The markup is there to pay for additional services and to ensure a good customer experience.
What is the difference between regulated and deregulated utilities?
In regulated utilities, the state owns power generation, transmission, distribution, and it also provides electricity to residential, commercial, and industrial customers. In deregulated areas, the chain is broken down into segments. Power plants, TDUs (Transmission and Distribution Utilities), and energy providers (REPs) are all separate companies who work together to ensure reliable power supply. In markets where energy deregulation took place, the state has an observatory and regulatory role.
What are the disadvantages of deregulation?
There are disadvantages of deregulation as well. In most cases, an overly competitive market can lead to customer confusion, difficulties in choosing, and unfair market moves from energy providers, as well as untransparent energy pricing and hidden fees that can occasionally double the electric rate you’ve agreed to. Furthermore, states with deregulated power risk creating private monopolies and helping unfair practices.
How many states have deregulated utilities?
Only 17 states enjoy some form of deregulation. These deregulated energy states are California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, and Texas. Besides these, Washington D.C. also enjoys energy deregulation.
Conclusion
Deregulated energy states in the US have grown in number ever since the first state became deregulated back in the 1990s. Although many are still reluctant to deregulate their energy market, it is necessary to pinpoint that there are many states which have successfully undertaken this step. Their residents enjoy good customer service, competitive energy rates, as well as the power to choose.
Updated on