This is your complete guide to learning what energy deregulation is. Energy deregulation means removing regulations or restrictions, often with economic benefits to the consumer. You’re no longer stuck with a single utility company thanks to energy deregulation! Deregulated states get to choose who their electricity provider is instead of only having to go with what’s in their area. Deregulation of utilities creates competition, which means lower pricing and more control over your monthly bills.
Here at The Energy Professor, we want to give you the information you need to not only save money on your energy bill but to also become more energy efficient. We hope you find this post helpful and make it easier for you to know what is energy deregulation. Be sure to also check out our one-of-a-kind energy savings calculator!
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What is Energy Deregulation?
Energy deregulation is a process that allows consumers to have more of a choice in their energy providers. Deregulating energy means reducing or even removing state regulations from the energy market. If you live in an energy market that is not deregulated, you probably haven’t had a choice in what company you pay for. Deregulated energy markets allow consumers to compare pricing and shop competitively.
Is Deregulated Energy Cheaper?
- No! Deregulated energy is typically more expensive than a regulated energy market. According to The New York Times, “On average, residents living in a deregulated market pay $40 more per month for electricity than those in the states that let individual utilities control most or all parts of the grid.”
So, whether you own a business, a home, or live in an apartment it is important to look into your energy market and see how it can benefit you. If you have a deregulated market, for gas or electricity you might be able to receive certain deals or discounted rates that might not be available to regulated states.
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How Does Energy Deregulation Work?
Energy deregulation price is settled all on the utility company side, where each utility company sets and tries to sell its rates. Third-party companies then come in and purchase energy at the rates that work for them and sell it back to you. This creates competition with utility deregulation, as each third-party company can offer its rates to consumers. The third-party company acts as a “middle-man,” because consumers do not purchase energy outright from the companies that transmit and deliver them. Instead, through the already existing infrastructure, utility companies are only responsible for the actual production, delivery, and transmission of electricity. It makes it easier for consumers to just pay one service price, and choose a rate with a company that fits their needs.
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What are the Benefits of Energy Deregulation?
The benefits of energy deregulation are great, with the most important being – you save money. When locked into a regulated market, if energy costs go up, you don’t have a choice to look for a cheaper option. Energy deregulation puts the power back into the hands of the consumer, and that’s probably the biggest pro to it. That’s why electricity deregulation is becoming more of a topic since electricity costs are rising. Although New York is one of the states with deregulated energy, the average NY bill is going up each year, making consumers want to shop around more.
What are the Benefits of Deregulated Electricity Markets?
- Monthly Savings
- Power of Choice
- Access to Green Energy
- Better Service with increased competition
Monthly Savings
As we mentioned above, energy competition means that companies will be fighting to have the best rates, so they will most likely be lower. These third-party companies can also offer special seasonal fares or incentives to sign up with them, which is great. It is at the top of our list for a pro of deregulation of energy as the energy market price only increases each year.
Power of Choice
Deregulation lets consumers choose the companies they want, rather than be forced into a contract with one. Switching energy providers is much more simple than it seems, and some companies even have bonuses for changing providers. That freedom is a huge perk to energy deregulation, as consumers don’t feel trapped by one price.
Access to Green Energy
With green energy growing in popularity, deregulated energy companies have taken notice that consumers want more renewable energy options. In certain markets, consumers can purchase energy from wind or solar farms instead of the traditional power plant. That gives buyers better options for those looking to start more energy-efficient practices.
Better Service and Better Options
Competition in the deregulated market means that each company has to convince you that they’re the best of the best. That means customer service is typically better, as they know you have other choices within the market. In the event of a brownout and blackout, your service provider is going to be in charge of getting your power back on. That is a big perk for those who have had issues with their utility company in the past.
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What are the Deregulated Energy States?
Unfortunately, not all states fall into the category of deregulated, and most states in the US are regulated. While the majority of states are regulated, more are pushing for the option to choose their energy provider. We do have an entire article dedicated to states with energy deregulation, so make sure to check that out if you want to learn more! So, if you’ve ever wondered about your electricity price, you might want to consider moving to a state with deregulated power markets.
What States Have Energy Deregulation?
- California
- Texas
- Connecticut
- Delaware
- Illinois
- Maine
- Maryland
- Massachusetts
- Montana
- Michigan
- New Jersey
- New Hampshire
- New York
- Ohio
- Pennsylvania
- Rhode Island
- Virginia
Related Post: Which States Have Deregulated Energy?
What Does Energy Deregulation Mean for You?
First off, if you live in an energy-deregulated state, we highly suggest checking in to what you pay for electricity. Since deregulation is the restructuring of the existing energy market to increase competition, it is designed to work better for you. Take advantage of all of the deals you find, and shop around for a little bit before signing a contract. Utilities are a huge part of the average person’s budget, and saving even a couple hundred dollars a year can help! You never know if you’re overpaying for electricity unless you check either, so don’t wait to save money!
How do I find out if I live in a deregulated market area?
Deregulated markets are set by state, and not by area. So, as a rule of thumb, we always say to check out your state’s energy market to know where you fall. You can check our list above or use your Energy Savings Tool, which will help you understand your electricity bill better!
Related Post: Are You Overpaying For Electricity?
Energy Deregulation FAQ
Q: What are the Benefits of Energy Deregulation?
The benefits of energy deregulation include potential monthly savings, the power of choice, access to green energy, and better service due to increased competition.
Q: Which States Have Energy Deregulation?
As of 2024, states with energy deregulation include California, Texas, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Montana, Michigan, New Jersey, New Hampshire, New York, Ohio, Pennsylvania, Rhode Island, and Virginia.
Q: How Can I Find Out if I Live in a Deregulated Market Area?
Deregulated markets are set by state, not by area. You can check our list of deregulated states or use our Energy Savings Tool to understand your electricity bill better.
Q: Who Benefits From Energy Deregulation?
A: You, the consumer! Energy deregulation restructures the energy market to eliminate monopolies and gives buyers a choice. This allows consumers to shop around for pricing, getting them the best deal for what company fits their needs.
Do you Need Cheaper Electricity?
If you’ve taken the time to understand the information on your bill and discovered you’re paying more than you’d like for your electricity, have you looked around for a cheaper deal? The Energy Professor has a wealth of information on saving on your utilities, including details of top deals that could significantly reduce your monthly or quarterly electricity bills.
We hope you found this article helpful! If you are looking for ways to increase energy efficiency and sustainability in your home be sure to look at all of the latest renewable energy options in your area. The Energy Professor helps residential and small business owners find qualified energy suppliers in New York, New Jersey, Pennsylvania, Texas, Ohio, Maryland, Illinois, and Massachusetts
