Energy deregulation separates the wires (delivery) from the electrons (supply). Utilities still own and operate the physical infrastructure. But in deregulated states, any licensed retailer can sell you the electricity itself — and they compete for your business on price.
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Regulated vs. Deregulated States
In regulated states, one utility handles everything: generation, transmission, and distribution. You buy electricity from that utility at rates set by the state public utilities commission. There's no competition; rates are what the PUC approves.
In deregulated states, utilities still own the wires, but the generation and supply function is open to competition. Licensed retail energy providers (REPs) generate or buy electricity wholesale and sell it to commercial customers at market rates. The PUC still regulates delivery; supply rates are set by competition.
The 20 Deregulated States
Commercial retail choice is available in: Texas, Pennsylvania, Ohio, Illinois, New York, New Jersey, Massachusetts, Connecticut, Maryland, Michigan, Delaware, New Hampshire, Maine, Rhode Island, Montana, Oregon, California (large accounts), Virginia (large accounts), and several others with partial deregulation.
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What Deregulation Means for Your Business
If you're in a deregulated state, you have two components on your electricity bill: (1) delivery — regulated, fixed, non-negotiable; (2) supply — competitive, where you choose your supplier. A broker's job is to find you the best supply rate from the competitive market.
ISO and Grid Operators
Behind the deregulated retail market is a wholesale market managed by an independent system operator (ISO) or regional transmission organization (RTO). The ISO coordinates generation, transmission, and reliability. Key ISOs: ERCOT (Texas), PJM (Mid-Atlantic/Midwest), NYISO (New York), ISO-NE (New England), MISO (Midwest/South).
Default Service: What Happens Without a Supplier Choice
Businesses that don't choose a retail supplier get placed on 'default service' — a rate set by the utility or PUC, often indexed to wholesale prices. Default service is not always the worst option, but it's rarely the most competitive. Running a broker process establishes whether you're leaving money on the table.
Frequently Asked Questions
What states have deregulated commercial electricity?
The main deregulated commercial electricity states are Texas, Pennsylvania, Ohio, Illinois, New York, New Jersey, Massachusetts, Connecticut, Maryland, Michigan, Delaware, New Hampshire, Maine, Rhode Island, and several others with partial deregulation.
What does a commercial energy broker charge?
Nothing out of pocket. Broker compensation is built into supplier pricing and present in every offer regardless of whether a broker is involved. You get a competitive process at no additional cost.
How long does it take to switch electricity suppliers?
Supplier switches typically take one billing cycle — about 30 days. There's no service interruption. Your utility continues delivering power through the transition.
What's the difference between kW and kWh?
kWh (kilowatt-hours) measures consumption — the total electricity used over a period. kW (kilowatts) measures demand — the rate of consumption at a specific moment. Demand charges are based on peak kW; supply charges are based on total kWh.
When should I start looking for a new electricity supplier?
Start 6–9 months before your current contract expires. That window gives suppliers time to bid competitively and gives you time to make a considered decision without urgency.