Trystan Casey
Energy choice, also referred to as a deregulated market, is a concept that allows consumers to choose their electricity or natural gas supplier. This choice is based on individual needs, such as budget and values, and empowers consumers to align their energy supply with their preferences. As of 2025, nearly half of the US states have introduced some form of energy deregulation and retail energy choice, with 17 states and Washington D.C. adopting electric retail choice programs. These programs enable end-use customers to purchase electricity from competitive suppliers, with varying participation rates across residential, commercial, and industrial sectors. While some studies indicate lower prices and increased competition in deregulated markets, others suggest that retail choice leads to higher electricity prices due to sensitivity to natural gas price fluctuations.
| Characteristics | Values |
|---|---|
| Number of states with electric retail choice programs | 17 states and Washington DC |
| States with the highest participation rates | Northeast, Mid-Atlantic states, and Texas |
| States with the highest share of electricity provided by competitive retail suppliers | Connecticut, Ohio, Texas, Illinois, Maryland, Delaware, New Jersey, Montana |
| States with partial retail choice | CA, OR, GA, NV, VA |
| States without retail choice | Missouri |
| Impact of retail choice on electricity prices | Inconclusive; some studies indicate lower prices, others found no change, and others suggest higher prices |
| Impact of natural gas price changes on electricity prices in restructured states | More direct impact; prices rose by 0.35 ¢/kWh for each $1 increase per 1000 ft3 of natural gas |
| States with deregulated natural gas markets | Georgia, Massachusetts, Illinois |
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What You'll Learn
- Seventeen states and Washington DC have adopted electric retail choice programs
- Northeast, Mid-Atlantic, and Texas have the highest participation rates
- Mid-Atlantic states with the highest share of electricity from competitive suppliers include Maryland, Delaware, and New Jersey
- Montana is the only western state with a high participation rate
- Michigan has a 10% cap on electricity consumption from alternative electricity suppliers
Seventeen states and Washington DC have adopted electric retail choice programs
Seventeen states and Washington, D.C., have adopted electric retail choice programs, allowing customers to choose their electricity provider and purchase electricity from competitive retail suppliers. This is often referred to as a deregulated market, where consumers are not limited to a single utility company and can select a supplier that aligns with their budget, priorities, and values.
The adoption of these programs has been driven by a push for competition and innovation, with states like New York, Texas, and Illinois being among the first to implement restructured energy markets. As a result, consumers have access to a broader range of products and services, such as 100% renewable energy options, free electric vehicle (EV) charging, and smart home energy services.
However, it is important to note that the impact of retail choice on electricity prices is debated. Some studies indicate that retail choice leads to lower prices for residential, commercial, and industrial customers. In contrast, others suggest that states with retail choice may experience higher electricity prices due to sensitivity to natural gas price fluctuations.
As of 2025, nearly half of the US states have introduced some form of energy deregulation and retail choice. States with partial retail choice, such as California, Oregon, Georgia, Nevada, and Virginia, have limitations on customers' ability to choose their power supplier. For example, in Michigan, no more than 10% of the state's total electricity consumption can come from an alternative electricity supplier.
The District of Columbia, Maryland, Delaware, and New Jersey are among the states with notable participation rates in retail choice programs.
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Northeast, Mid-Atlantic, and Texas have the highest participation rates
Seventeen states and the District of Columbia have adopted electric retail choice programs, allowing end-use customers to purchase electricity from competitive suppliers. While residential participation rates are low across these states, commercial and industrial customers have shown a preference for competitive suppliers in several states. The highest participation rates are found in the Northeast, Mid-Atlantic states, and Texas, where electricity is supplied through Regional Transmission Organizations (RTOs) and states have unbundled generation from retail delivery and sales.
In the Northeast, five states have industrial customer participation rates ranging from 65% to 75%. Connecticut stands out for its high residential sector participation rate of 29%, the highest outside of Texas. Maine is also a retail choice state, but reporting issues prevent the calculation of accurate percentages.
In the Mid-Atlantic region, Maryland has the third-highest share (84%) of electricity provided by competitive suppliers among the Mid-Atlantic states. Delaware and New Jersey also have industrial and commercial sector participation rates above 50%. The District of Columbia has industrial customer participation in a retail choice program.
Texas is notable for its high participation rates, with about 60% of residential, commercial, and industrial customers choosing competitive suppliers.
The availability of energy choice programs varies across states, with some states offering full retail choice, while others have partial or no retail choice. For example, Michigan allows electricity choice but limits it to 10% of an electric utility's average weather-adjusted retail sales. Other states, like Missouri, have no retail choice, with electricity prices determined by state utility regulatory commissions.
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Mid-Atlantic states with the highest share of electricity from competitive suppliers include Maryland, Delaware, and New Jersey
Seventeen states and the District of Columbia have adopted electric retail choice programs that allow end-use customers to buy electricity from competitive suppliers. Mid-Atlantic states with the highest share of electricity from competitive suppliers include Maryland, Delaware, and New Jersey. Maryland has the third-highest share (84%) of electricity provided by competitive suppliers among Mid-Atlantic states. The industrial and commercial sectors in Delaware and New Jersey have competitive supply participation rates of over 50%.
In the Northeast, Mid-Atlantic, and Texas, electricity is supplied through Regional Transmission Organizations (RTOs), and states have unbundled generation from retail delivery and sales. The PJM Interconnection operates a competitive wholesale electricity market and manages the transmission grid in 13 states, including Delaware, Maryland, and New Jersey.
Other states with competitive energy supplier choices include Michigan, New Hampshire, and Nevada, although the latter only offers natural gas choice for commercial and industrial consumers. In the West, Montana has a high participation rate in the industrial sector, with over 50% of sales provided by competitive suppliers. The California Independent System Operator (CAISO) operates a competitive wholesale electricity market and manages the reliability of its transmission grid in California and a portion of Nevada.
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Montana is the only western state with a high participation rate
Seventeen states and Washington, D.C., have adopted electric retail choice programs, allowing customers to buy electricity from competitive suppliers. While residential participation rates are generally low, commercial and industrial customers have shown a preference for competitive suppliers in several states, including Montana, which has the highest participation rate among western states.
Montana's industrial sector has embraced competitive suppliers, with 63% participation. As early as 2001, over 50% of the state's industrial sector sales were provided by competitive suppliers. This trend towards competitive suppliers in Montana's industrial sector has continued over the years, solidifying the state's position as a leader in the western region for electric retail choice.
Montana's high participation rate in electric retail choice programs can be attributed to several factors. One factor is the state's proactive approach to energy restructuring. Montana recognised the benefits of competition and innovation in the energy sector and made strides towards restructuring its electric power industry. By introducing retail energy providers, Montana offered its industrial consumers more choices and empowered them to select suppliers that aligned with their budget and priorities.
Additionally, the availability of competitive suppliers in Montana's energy market has played a role in its high participation rate. Competitive suppliers are attracted to markets with favourable conditions, such as a supportive regulatory environment and a robust energy infrastructure. Montana's efforts to create a competitive landscape have likely encouraged the entry of multiple suppliers, providing industrial consumers with a diverse range of options to choose from.
The impact of Montana's high participation rate in electric retail choice extends beyond the state itself. Neighbouring states and energy regulators across the western region can observe and analyse the effects of increased competition and consumer choice. By studying Montana's experience, they can identify best practices, potential challenges, and the impact on energy prices. This knowledge can inform policy decisions and shape the future of energy choice programs in other western states, potentially leading to greater consumer empowerment and a more dynamic energy landscape in the region.
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Michigan has a 10% cap on electricity consumption from alternative electricity suppliers
Seventeen states and the District of Columbia have adopted electric retail choice programs that allow end-use customers to buy electricity from competitive suppliers. The highest participation rates are found in the Northeast, Mid-Atlantic states, and Texas, where electricity is supplied through Regional Transmission Organizations (RTOs).
Michigan is one of the states that has a choice of electricity suppliers. However, there is a 10% cap on electricity consumption from alternative electricity suppliers. This means that no more than 10% of an electric utility's average weather-adjusted retail sales for the preceding calendar year may be sourced from an alternative electric supplier. Currently, Consumers Energy, DTE Electric, UPPCo, UMERC, and Cloverland are fully subscribed at 10% participation. If the 10% cap is reached, new customers will be placed in a queue.
Michigan's electricity rates are higher than the national average and are the highest in the region. The state's monopoly-based, tightly regulated system has been criticised for failing to provide reasonable rates for consumers. In 2000, a state law allowed all retail electricity customers to choose their energy supplier. However, in 2008, legislators repealed access to choice and gave two regulated public utilities, DTE and Consumers Energy, a monopoly over 90% of the retail electricity market in the Lower Peninsula.
There is growing interest in alternative energy sources in Michigan. In 2023, electricity net generation from utility-scale solar in Michigan increased by 53%, with 11 solar farms coming online and adding nearly 270 megawatts of generation capacity. Michigan also has the largest underground natural gas storage capacity in the nation, with natural gas being the largest source of electricity generation in the state as of 2023.
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Frequently asked questions
Electric retail choice, also known as energy choice, is the option for customers to choose their energy provider. This creates competition among suppliers, allowing consumers to choose a plan that aligns with their budget, priorities, and values.
Seventeen states and Washington, D.C., have adopted electric retail choice programs. These include Texas, New York, Illinois, Connecticut, Maine, Delaware, New Jersey, Maryland, Ohio, Montana, California, Oregon, Georgia, Nevada, and Virginia.
Electric retail choice empowers consumers to choose a supplier that best serves their needs. It promotes competition, leading to innovation and better value in the market. It also allows consumers to support renewable energy and access services like EV charging and smart home energy solutions.
Some studies suggest that states with retail choice may experience higher electricity prices due to sensitivity to natural gas price fluctuations. However, other studies indicate lower prices with retail choice, and certain states, like Texas, have seen high participation rates. Overall, the benefits of electric retail choice are inconclusive and depend on various factors.
