Molly Ayala
Whether you can choose your electricity supplier depends on where you live. In the US, as of 2024, 31 states have some level of energy choice. In 13 states and the District of Columbia, all utility customers served by investor-owned utilities (IOUs) have the option to choose an alternate electricity supplier. This is often called retail choice or customer choice. In six states, only non-residential utility customers have this choice. In a regulated energy market, you cannot choose your energy provider, but in a deregulated market, you can. Some states have a mix of regulated and deregulated cities.
| Characteristics | Values |
|---|---|
| Choice of electricity supplier | Available to utility customers served by IOUs in the District of Columbia and 13 states: California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, and Rhode Island |
| Available to non-residential utility customers in Michigan, Montana, Nevada, Oregon, Virginia, and Washington | |
| Available in Texas to all customers connected to the electric grid managed by the Electric Reliability Council of Texas (ERCOT) | |
| Available in states with energy deregulation | |
| Not available in regulated energy markets | |
| Available in some electric cooperatives, municipal utilities, and government-operated utilities | |
| Benefits of switching | Lower energy rates |
| Better customer service | |
| Plan features that fit your unique energy usage habits | |
| Fixed-rate plans | |
| Green energy plans | |
| Additional incentives, benefits, and services |
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What You'll Learn
Energy deregulation and choosing a provider
Energy deregulation is a process that opens up energy systems to competitors, giving consumers the freedom to choose their energy provider. In a regulated energy supply system, consumers are limited to a single utility company that sets the energy price and controls the costs involved in delivering it to homes. This creates a monopoly, with no competitors to switch to, and the public utility is regulated by the state.
Deregulation began in the 1970s when OPEC's worldwide oil embargo caused petroleum oil to become scarce and electricity and gas prices to skyrocket. This sparked a renewed interest in alternative energy sources, and in 1978, Congress passed the Public Utilities Regulatory Policies Act (PURPA). While the Energy Policy Act later opened up the market to private energy providers, it was the Federal Energy Regulatory Commission's (FERC) Order 888 in 1996 that forced utility companies to open their transmission lines to competitors and provide public access to their energy rate schedules.
In a deregulated market, multiple suppliers can exist within a single territory, and consumers can choose from a wider variety of natural gas and electricity suppliers. The government still regulates utilities and the energy they deliver, but consumers can now choose from different packages and deals offered by competing companies. This gives consumers more power over the priciest part of their energy bill—the energy supply—while still enjoying the same reliable service.
As of 2022, retail choice or customer choice was available for all utility customers served by IOUs in the District of Columbia and 13 states: California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, and Rhode Island. Six other states have non-residential utility customer retail choice: Michigan, Montana, Nevada, Oregon, Virginia, and Washington.
Deregulation has its pros and cons. While it introduces competition and gives consumers more options and control over pricing, it also requires consumers to be more informed about their energy choices. Additionally, it can create opportunities for bad actors or scams, with the onus on the consumer to make good decisions.
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Fixed-rate energy plans
In some states, you have the option to choose an electricity supplier. This is often called retail choice or customer choice. The alternate supplier may be an affiliate of the distribution utility and may offer electricity generated from renewable sources.
With a fixed-rate energy plan, the price you pay per kilowatt-hour (kWh) remains the same throughout your contract. So, even if market prices fluctuate, your energy rate will stay the same. This makes it easier for budgeting, as you can plan how much you'll be spending on energy each month.
However, a fixed-rate plan doesn't guarantee that your electric bill will always be the same. The rate is still applied per kilowatt-hour, so your bill will vary depending on your usage. Additionally, if market prices drop below the fixed rate, you won't benefit from the lower prices. Fixed-rate plans may also have early cancellation fees if you decide to change plans before your contract ends.
Fixed-rate plans offer stability and are a good option if you want to shield yourself from volatile energy markets. However, they might not be ideal if you prefer to frequently switch plans and suppliers to take advantage of changing energy rates. In that case, a variable-rate plan might be more suitable, as they offer more flexibility.
When choosing between fixed-rate and variable-rate plans, it's important to carefully consider the benefits and drawbacks of each. Variable-rate plans often start with a lower initial rate, but the price can increase after a couple of months. They can be beneficial when market prices are low, but you may end up paying more if energy demand or temperatures rise.
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Cost-effective options
Firstly, it's important to understand the energy requirements of your home or business. This knowledge will empower you to make informed decisions when comparing different suppliers and their rates. Analyzing your current costs will help you identify a supplier that aligns with your budget and energy needs.
Switching to a new energy provider may offer the opportunity to select a more affordable plan. You can explore different pricing options and plans, potentially finding a provider with better rates. Fixed-rate plans can provide stability by locking in your energy supply rate for the duration of your contract, eliminating unpredictable monthly bills.
Additionally, consider the benefits of choosing a renewable energy plan. Many providers now offer competitively priced green energy plans, allowing you to reduce your carbon footprint without compromising your budget.
To make an informed decision, it's advisable to check for any potential fees associated with switching providers. Refer to your Electricity Facts Label to determine if there will be any charges for changing suppliers.
Remember, switching energy suppliers is not just about cost; it's about finding a company and plan that align with your unique needs and values.
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Reducing your carbon footprint
Depending on where you live, you may be able to choose your electricity supplier. In 2022, retail choice was available for utility customers served by IOUs in the District of Columbia and 13 states. Six states have non-residential utility customer retail choice. Some suppliers offer electricity generated from specific sources, such as wind and other renewable energy sources.
Switch to a Green Energy Provider
If it is possible in your area, you can switch your home energy supply to a green energy plan or change to a 100% renewable energy provider. This can help lower your energy use and personal impact.
Install Solar Panels or Solar-Powered Technology
If you cannot change your home energy supplier, you can reduce your dependence on fossil fuels by installing solar panels at your home, buying a solar water heater, or using solar-powered technology, such as outdoor lighting or portable chargers.
Choose Energy-Efficient Appliances
You can reduce your carbon footprint by choosing energy-efficient appliances, heating, and cooling solutions. For example, installing LED lights or updating to ENERGY STAR® appliances can make a significant difference.
Support Sustainable Companies
When choosing an electricity company, consider supporting companies with strong sustainable values and practices. You can also ask your company, landlord, or city to make the change to renewable energy and support energy-saving campaigns.
Reduce Your Consumption
In addition to choosing a sustainable electricity company, you can reduce your carbon footprint by recycling and reusing. Choose recycled products, and remember to recycle items you no longer need. You can also reduce your water usage by installing low-flow showerheads and toilets and reducing your shower time.
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Customer service
When evaluating customer service, it is essential to consider your priorities and preferences. Some factors to consider include the availability of online features, such as an app or portal, for managing your account information. Additionally, you may want to look into the company's incentives or rewards programs to maximize potential savings and additional perks. It is also helpful to research the company's customer service reputation and read reviews from other customers.
Before switching to a new supplier, carefully review the terms and conditions of the contract. Ask questions about pricing plans, contract terms, additional fees, and hidden charges. Understand the energy sources used by the company, especially if you prioritize using renewable or clean energy options. In case of an emergency, such as a power outage, it is important to know who to contact and the procedures in place to ensure uninterrupted service.
In some cases, your utility provider may remain responsible for distribution and infrastructure, even if you choose a third-party electric supplier. This means that you will still receive a bill from your utility provider, and they will handle any distribution-related issues, such as outages. However, any concerns or questions about the contract or amount owed to the third-party supplier should be directed to that company.
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Frequently asked questions
Yes, in some places. In the US, this depends on the state and city you live in. As of 2024, 31 states have some level of energy choice. Certain states have deregulated only natural gas or electricity. Some deregulated states still have cities with a regulated energy market, such as Austin and San Antonio, and others limit the power to choose for commercial customers.
Choosing your electricity supplier gives you the ability to select a provider that works for you and your needs. You may be able to find a more affordable plan, a fixed-rate plan, or a renewable-energy plan. You may also experience improved customer service.
First, check that the energy supplier serves your state and offers the type of energy you need (natural gas, electric, solar, or renewable). Then, find out if the price includes any taxes or additional fees. Analyze your current costs to see if switching suppliers will meet your needs. Finally, contact your new energy company to get a timeline of when the switch will occur.
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