Deregulated Electricity States: A Guide for Businesses

Thirteen states and Washington, D.C. let most businesses choose their electricity supplier, and six more offer choice to a limited group of customers. Knowing which deregulated electricity states you operate in tells you whether your rate is set for you or is something you can actively manage.

What does “deregulated electricity” actually mean?

In a deregulated state, your local utility still owns the poles and wires and still delivers power to your building. What changes is who supplies the electricity itself. You can buy that supply from a competitive retail supplier instead of taking the utility’s default rate.

That split shows up on your bill as separate supply and delivery charges. Delivery stays regulated. Supply becomes a strategic purchasing decision.

Choice also depends on who your utility is. According to the U.S. Energy Information Administration (EIA), retail choice is generally available only to customers of investor-owned utilities. Businesses served by a municipal utility or an electric cooperative usually cannot shop, even inside a deregulated state.

Which states let businesses choose their electricity supplier?

These markets are open to most commercial customers of investor-owned utilities:

• Northeast: Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island

• Mid-Atlantic: Delaware, Maryland, New Jersey, Pennsylvania, Washington, D.C.

• Midwest: Illinois, Ohio

• Texas: most of the region served by ERCOT (the Electric Reliability Council of Texas, which runs most of the state’s grid)

Texas works differently from the rest. In the competitive parts of ERCOT, businesses must pick a retail provider. Cities served by their own municipal utilities, such as Austin and San Antonio, sit outside that market.

Where is electricity choice limited?

Six states allow some businesses to shop, but cap who can participate or how much load can leave the utility:

• Michigan: choice is capped at 10% of each utility’s retail sales under Public Act 286 of 2008. The Michigan Public Service Commission reported in February 2026 that the program remained fully subscribed, with about 5,101 customers waiting for space to open.

• California: the Direct Access program lets nonresidential customers buy from a competitive supplier, but total enrollment is capped by law. 

• Oregon: nonresidential customers of Portland General Electric and Pacific Power can buy from an approved electricity service supplier.

• Virginia: larger customers can shop, with conditions on returning to utility service. 

• Nevada: large customers can apply to leave NV Energy, subject to commission approval and exit fees. 

• Montana: only the largest commercial and industrial customers can choose. 

In these states, eligibility comes first. A business can qualify on paper and still wait years for a slot. It’s worth a conversation with an energy advisor to check if your business would be eligible. 

Why does your state change how you should buy energy?

In a regulated state, a public utility commission sets your rate. Your levers are usage, efficiency, and choosing the right utility tariff. Price itself is not something you negotiate.

In a deregulated state, price becomes a decision with timing attached. You choose when to buy, how long to lock in, and whether to take a fixed rate,  index pricing, or a combination of the two. Doing nothing is also a decision: staying on the utility’s default rate means accepting whatever price the utility passes through each period.

The grid region matters too. Two deregulated states can carry very different capacity charges, the fees for guaranteeing enough power plants are available at peak demand, because each grid operator prices capacity on its own schedule.

For a business with sites in several states, this is the core challenge. One portfolio can include a fully open market, a capped market and a regulated one. Each needs its own buying calendar, so treating energy as a single portfolio-wide strategy rather than a stack of separate renewals can help keep budgets predictable.

Is natural gas deregulated in the same states?

Not always. Natural gas choice follows its own state-by-state map. Georgia, for example, has gas choice in much of the state but no electricity choice. Many gas markets also work through transportation service programs, so check gas and power separately for every site.

Key Takeaway

Most businesses can choose their electricity supplier in 13 states and Washington, D.C., while six more states offer limited or capped choice. Eligibility depends on both your state and your utility. Where choice exists, the price you pay depends on when and how you buy, not just where you are.