What is Electricity Deregulation? Understanding Energy Choice in 2025

Electricity deregulation is the process of opening up the electricity market to competition, allowing consumers to choose their power supplier. How it used to work (regulated):

• Utility companies operated as monopolies
• Controlled both electricity generation AND delivery
• Charged rates approved by regulators

How deregulation changed things:

• Delivery: Utility continues managing wires (still a natural monopoly)
• Generation: Now competitive — multiple suppliers compete for your business

Benefits of competition:

• Potentially lower rates
• Renewable energy options
• Better customer service

Current scope: About 17 states + Washington D.C. have implemented some form of electricity deregulation, affecting millions of customers. Tools like ElectricRates.org help consumers in deregulated states compare all available supplier offers in one place.

Understanding supply versus delivery is essential to grasping electricity deregulation. Supply (Generation):

• Creating electricity at power plants
• Sources: natural gas, coal, nuclear, wind, solar, etc.
• In deregulated markets: multiple companies compete

Delivery (Distribution/Transmission):

• Moving electricity from power plants to your home
• Uses power lines, substations, and meters
• Remains regulated — duplicating infrastructure is impractical
• Your utility maintains this system regardless of supplier

On your bill: You'll see separate charges for supply and delivery. Key takeaway: Deregulation only affects the supply portion, giving you choice over where your electricity comes from and what you pay for it.

Competitive electricity markets allow multiple suppliers to offer different rates and plans to consumers. How suppliers operate:

1. Purchase electricity from generators through wholesale markets or power purchase agreements
2. Package it into retail products with various terms
3. Compete on price, terms, service, and environmental attributes

Types of plans available:

• Fixed rates: Stay constant for the contract period
• Variable rates: Change monthly with market conditions
• Renewable plans: Sourced from clean energy

Your utility's role:

• Reading your meter
• Calculating usage
• Often handling billing for both supply AND delivery
• Coordinating supplier transitions

The result: Competition theoretically drives down prices and improves service as suppliers work to attract and retain customers.

Energy choice offers several advantages for electricity consumers: 1. Price savings

• Competitive pressure typically reduces generation costs
• Consumers using ElectricRates.org save an average of $521*/year
• Results vary by market and timing

2. Renewable energy options

• Many suppliers offer 100% wind or solar plans
• Support clean energy aligned with your values

3. Budget certainty

• Fixed-rate plans lock in your rate
• Protection from market fluctuations

4. Innovative products

• Time-of-use rates
• Demand response incentives
• Smart home integration

5. Consumer empowerment

• Rather than accepting utility-determined rates...
• Actively manage your electricity costs
• Select a supplier aligned with your values

Approximately 17 states + Washington D.C. have implemented residential electricity choice. Major deregulated states:

• Texas: Most competitive market — dozens of suppliers, no default utility rate
• Pennsylvania, Ohio, Massachusetts: Robust competition with state-run comparison websites
• Illinois, New York, Connecticut, New Jersey, Maryland: Various levels of competition

ElectricRates.org availability: Currently serves Ohio, Pennsylvania, and Massachusetts with automated rate comparison and monitoring. Limited or paused programs:

• California and Virginia have limited or paused deregulation

If you're in a regulated state:

• Your utility sets generation rates
• Subject to state regulatory approval

Note: Even in deregulated states, some municipal utilities and rural cooperatives remain regulated.

Switching electricity suppliers is a straightforward process designed to be seamless. Step-by-step process:

1. Compare offers from licensed suppliers using:
   • Your state's official comparison tool
   • ElectricRates.org
   • Both
2. Select a plan based on rate, terms, and priorities (like renewable content)
3. Enroll by providing:
   • Utility account number
   • Service address
   • Personal information
4. Supplier notifies your utility and coordinates the transition
5. 1-2 billing cycles later: New supplier becomes active

What happens at your home:

• Nothing physical changes
• No one visits
• No equipment installed
• Power continues flowing from the same wires

The only difference: Which company generates your electricity and what rate appears on your bill.

Many consumers have understandable concerns about electricity choice. Here are the facts: ❓ "Will switching cause outages?" ✓ No. Your utility maintains the delivery system regardless of supplier. Lights stay on even if you change suppliers monthly. ❓ "Is it complicated?" ✓ No. Modern enrollment takes minutes online or by phone. You still receive one bill. ❓ "Are suppliers legitimate?" ✓ Yes. State regulators license all suppliers. Official comparison sites only list certified companies. ❓ "What if I choose poorly?" ✓ Easy fix. You can switch again or return to the utility's default rate. ❓ "What about service quality?" ✓ Unchanged. Your utility still handles outages and delivery issues. Suppliers only handle billing questions about generation charges. Bottom line: Deregulation has operated successfully for decades in many states, with millions of satisfied customers exercising their right to choose.

While deregulation gives consumers power to choose, effectively comparing rates remains difficult. Why it's challenging:

• Rates change frequently: Sometimes weekly or daily as wholesale markets fluctuate
• Contract terms vary significantly: Hard to make apples-to-apples comparisons
• Hidden costs: Some plans include monthly fees that raise the effective per-kWh cost
• Introductory rates: May expire after a few months
• Variable rate surprises: Can spike unexpectedly during peak demand

The time problem: Most consumers simply don't have time to:

• Monitor market conditions
• Compare dozens of suppliers
• Evaluate complex contract terms

The solution: Services like ElectricRates.org automate the comparison process, continuously monitoring rates and alerting consumers when better options become available.

ElectricRates.org eliminates the complexity of electricity shopping. What it does:

• Automatically compares rates from all licensed suppliers in Ohio, Pennsylvania, and Massachusetts
• Enter your ZIP code → see current rates in under 2 minutes
• Monitors rates 24/7 and alerts you when better options appear

Why it's different from state comparison tools:

• Personalized recommendations based on your usage patterns
• Handles enrollment paperwork for you
• Reminds you before contracts expire so you can shop again

The platform:

• Built by the team behind ComparePower.com
• Has helped 4.8+ million customers save on electricity since 2008

Cost: Completely free for consumers — suppliers pay a small commission when customers switch.

Ready to explore electricity choice? Here's how to get started: Step 1: Find your current bill

• Identify your utility and current rate

Step 2: Compare options

• Fastest way: Enter your ZIP code at ElectricRates.org
• Alternative: State comparison sites (PAPowerSwitch.com, Ohio Apples to Apples)

Step 3: Evaluate offers

• Compare against your current rate
• Factor in any monthly fees
• Read contract terms carefully:
  • Rate type (fixed or variable)
  • Contract length
  • Cancellation fees
  • Renewable content

Step 4: Enroll

• Enroll directly through ElectricRates.org or with the supplier

Step 5: Monitor

• Verify the new rate appears correctly on your bills
• Set up automatic rate monitoring through ElectricRates.org
• Get alerts when better rates become available