How to Switch Electricity Providers: Save Money in Deregulated States

Which States Are Deregulated?

Energy deregulation — formally called retail electric choice — separates the generation and sale of electricity from the delivery infrastructure. As of 2026, the following states have active residential retail electricity markets. Note that “partial” deregulation means only certain utilities or territories within the state offer choice:

Sources: ElectricChoice.com deregulated markets map (2026), ElectricRates.org state deregulation data, state PUC websites. Switching rates are estimates based on state utility commission reporting and market research surveys.

If your state is not on this list — California, Florida, Georgia, North Carolina, Arizona, and others — your utility has a regulated monopoly and you cannot choose a different electricity supplier. However, you may have options within your regulated market including time-of-use rates, community solar subscriptions, and net metering for solar installations. See the regulated states section below.

For current rates in your state regardless of regulation status, our electricity rates by state guide tracks EIA data monthly.

Your Utility vs. Your Supplier: What Actually Changes

This is the concept that trips up most people who are new to deregulated markets. When you switch electricity suppliers, only the supply/generation portion of your bill changes. Your local utility — the company that owns the wires, poles, and transformers — continues to deliver your electricity and remains your point of contact for outages and emergencies.

In Texas’s ERCOT market — the most competitive in the country with over 100 active retail providers — the separation is complete. Your TDU (Transmission and Distribution Utility: Oncor, AEP, CenterPoint, or TNMP depending on your area) handles all delivery infrastructure, while your Retail Electric Provider (REP) handles generation contracting and billing. You call your REP for billing questions; you call your TDU for outages.

In most other deregulated states, your utility may continue to handle the entire bill and simply pass through the generation charge from your chosen supplier. The experience is seamless — you see one combined bill, but the generation line item reflects your chosen supplier’s rate rather than the utility’s default.

The Savings Math: What You Can Realistically Expect

Let’s be precise about what switching actually saves — and what it doesn’t. Delivery charges (25–40% of your bill), base charges, and taxes are fixed regardless of supplier. The only savings come from a lower energy rate per kWh.

Based on published competitive rates across Texas, Ohio, and Pennsylvania comparison marketplaces as of early 2026, a savings of $0.02–$0.04/kWh vs. the utility’s default Standard Service Offer is a realistic target in active competitive markets. The $0.05/kWh scenario applies when utilities have not updated their default rates in 12+ months while wholesale power prices have fallen.

Importantly, savings are not guaranteed to persist. Wholesale electricity prices fluctuate with natural gas markets, weather demand, and regional generation capacity. A plan that saves you 4¢/kWh today could be below market in 18 months. This is why re-shopping at contract expiration is as important as the initial switch — and why setting a calendar reminder before your contract end date is part of an effective strategy.

To understand whether your current rate is competitive, start by calculating your true all-in rate per kWh from your bill. Our guide to reading your electric bill shows exactly how to do this. Then compare against the best available rates on your state’s official marketplace. If the gap is more than 1.5¢/kWh, switching is almost certainly worth the 10 minutes of effort.

How to Switch: Step-by-Step

The process is genuinely simple — simpler than switching phone carriers or internet providers. Here is the complete sequence:

Contract Types Compared

Not all electricity plans are structured the same way. Understanding contract types is essential to avoiding the traps that cost customers money after the initial savings:

The variable-rate trap deserves special attention. During Winter Storm Uri in February 2021, some Texas customers on variable-rate plans received bills of $5,000–$17,000 for a single month as wholesale electricity prices spiked to the $9,000/MWh ERCOT market cap. This is an extreme example, but variable-rate plans regularly produce summer peak bills 30–80% higher than the equivalent fixed-rate option. Consumer advocates at the Texas Coalition for Affordable Power and similar organizations consistently recommend fixed-rate plans for the vast majority of residential customers.

Red Flags and Scams to Avoid

Energy deregulation has spawned a small industry of predatory practices. The Texas Public Utility Commission, New Jersey Board of Public Utilities, and Pennsylvania PUC each receive thousands of consumer complaints annually about deceptive electricity marketing. Here are the specific patterns to watch for:

The safest approach: use your state’s official comparison marketplace rather than third-party broker sites, read the standardized disclosure document (EFL or equivalent) before enrolling, and verify the supplier is licensed in your state through your state PUC’s database. Licensed suppliers in Texas are listed at the PUCT website; Pennsylvania suppliers are registered with the PA PUC.

Green Energy Plans: Are They Worth It?

Nearly every competitive electricity supplier now offers a “100% renewable” or “green energy” plan. Understanding what these actually mean is important before paying a premium.

Most “green” electricity plans are backed by Renewable Energy Certificates (RECs). One REC represents 1 MWh of electricity generated from a renewable source (wind, solar, hydro). When you enroll in a 100% renewable plan, your supplier purchases RECs equivalent to your consumption — but you receive the same grid electricity as everyone else. The physical electrons powering your home are not traceable to any specific source.

This is not a scam — REC markets fund renewable energy development and the system is regulated. But it’s worth understanding that choosing a green electricity plan is a financial contribution to renewable development rather than a guarantee that a wind turbine is spinning specifically for your home.

The premium for renewable plans has declined significantly as wind and solar costs have fallen. As of early 2026, many Texas renewable plans are priced within 0.5–1.5¢/kWh of equivalent conventional plans — a difference of $5–$15/month for most households. In New England and Mid-Atlantic markets, the premium is slightly higher at 1–3¢/kWh due to local REC market conditions.

If maximizing environmental impact is your goal, the highest-leverage options are still installing rooftop solar (which generates actual clean electricity) or enrolling in community solar (which provides a share of a local solar installation and often saves money vs. standard utility rates simultaneously). A green electricity plan is a meaningful secondary action, but not a substitute for on-site or community solar generation. See our guide to renewable energy types for a full comparison.

What If You Live in a Regulated State?

If your state is not on the deregulated list — California, Florida, Georgia, North Carolina, Arizona, Nevada, and most other states — you cannot choose a different electricity generation supplier. Your utility has a regulated monopoly approved by your state’s public utilities commission.

However, there are still meaningful options to reduce your bill:

• Time-of-use rate enrollment: Most utilities now offer optional TOU rates that price electricity cheaper during off-peak hours (typically 9 PM–5 AM). If you can shift EV charging and laundry to nights, a TOU rate can save 10–20% without reducing consumption. Our guide on time-of-use rates walks through who benefits and how to calculate your potential savings.
• Low-income assistance programs: LIHEAP (Low Income Home Energy Assistance Program) provides federal funds through states for energy bill assistance. Most utilities also operate their own discount rate programs for qualifying households. Call your utility’s customer service line to ask about available assistance programs.
• Community solar: Available in 40+ states including most regulated markets, community solar lets you subscribe to a share of a local solar farm and receive bill credits, often at 5–15% below your utility rate — without installing any panels on your roof.
• Efficiency programs and rebates: Regulated utilities are typically required to fund efficiency programs. Most offer rebates for smart thermostats ($50–$100), Energy Star appliances ($50–$500), insulation and air sealing ($500–$2,000), and heat pump installations ($200–$1,500). Check your utility’s website under “rebates” or “energy efficiency programs.”
• Rooftop solar with net metering: In states with strong net metering policies — including California, New York, New Jersey, and Massachusetts — excess solar generation is credited back to your bill at or near the retail rate. This is the most powerful bill reduction tool in regulated states. See our net metering guide for state-by-state policy details.

For regulated-state homeowners focused on long-term bill reduction, the math almost always favors investing in efficiency improvements and solar over trying to reduce consumption alone. The reason: your utility rate will likely continue rising at 3–5% per year while solar panels lock in energy production costs at near zero for 25+ years.

Frequently Asked Questions