In a deregulated electricity market, supply and delivery are separate businesses. The utility still owns the power lines and handles outages. But a competitive market determines who sells the actual electricity — and businesses can shop that supply rate the same way they shop any commodity.
Six markets on ElectricRates.org are deregulated: Texas, Ohio, Pennsylvania, Massachusetts, New Jersey, and Washington DC. Each works a little differently. Here is what the regulated–deregulated split means in practice, what default service looks like in each market, and how to use that information to lower your bill.
In a regulated state, a single vertically integrated utility generates electricity, transmits it across high-voltage lines, and delivers it to homes and businesses over local wires. The state utility commission sets one bundled rate. Customers have no supply choice.
In a deregulated state, the supply layer breaks off and becomes competitive. Retail electric providers (in Texas) or competitive electric generation suppliers (in the other states) buy power on the wholesale market and sell it to customers at rates they set. The utility retains the wires — it collects delivery charges for transmission and distribution and responds to outages exactly as before. Deregulation changes the supply transaction, not the physical infrastructure.
Your bill reflects this split. The supply (or generation) section shows what you pay per kWh for the electricity itself. The delivery section shows what the utility charges for moving that electricity to your meter — poles, wires, and maintenance. Switching suppliers changes only the supply section. Delivery charges stay fixed by the utility tariff regardless of who supplies the power.
Businesses that have not chosen a competitive supplier land on their utility’s default service rate. Default service names and structures vary by state and regulator. Here is what each market offers and where to find the current rate.
| State / Market | Default supply name | Regulator | What a business can do |
|---|---|---|---|
| Texas | None — no utility default; all customers must choose a REP | Public Utility Commission of Texas (PUCT) | Shop any licensed REP; compare fixed, variable, and indexed plans on Power to Choose |
| Ohio | Standard Service Offer (SSO) — rate published as Price to Compare | Public Utilities Commission of Ohio (PUCO) | Shop competitive suppliers on the PUCO Apples to Apples comparison site and compare against the SSO rate |
| Pennsylvania | Default service — rate published as Price to Compare | Pennsylvania Public Utility Commission (PA PUC) | Shop competitive suppliers on PAPowerSwitch and compare against the utility default rate |
| Massachusetts | Basic Service — rate resets every six months for residential, quarterly for commercial | Massachusetts Department of Public Utilities (DPU) | Shop competitive suppliers; compare fixed supplier rates against the current Basic Service rate published by each utility |
| New Jersey | Basic Generation Service (BGS) — established under the Electric Discount and Energy Competition Act (EDECA), 1999 | New Jersey Board of Public Utilities (NJ BPU) | Shop competitive electric generation suppliers (CEGS); compare against BGS rate for your utility |
| Washington DC | Standard Offer Service (SOS) — Pepco is the only utility; competition opened in 2001 | DC Public Service Commission (DC PSC) | Shop licensed electricity suppliers; compare against the SOS rate set by the DC PSC |
Texas deregulated under Senate Bill 7 in 2002 — the most complete restructuring of any U.S. electricity market. The Electric Reliability Council of Texas (ERCOT) operates the grid. Transmission and distribution utilities (TDUs) — Oncor, CenterPoint, AEP Texas, and others — own the wires. Retail electric providers (REPs) sell plans in their service territories.
Texas has no utility default supply rate. Any customer who does not choose a REP is placed on a provider of last resort (POLR) rate, which is set by the PUCT and intentionally priced above competitive market rates to push customers toward active shopping. For businesses in ERCOT territory, comparing plans is not optional — it is the starting point.
Ohio and Pennsylvania both publish a Price to Compare for each utility — the utility’s current supply rate in cents per kWh. Both states run official comparison websites: Ohio’s PUCO hosts the Apples to Apples tool, and Pennsylvania’s PUC runs PAPowerSwitch. Both sites list licensed competitive suppliers and their current rates alongside the utility default.
Ohio competitive choice opened in 2000. Pennsylvania opened its market under the Electricity Generation Customer Choice and Competition Act in 1996, with full retail competition by 1999. Both states run competitive wholesale markets through PJM Interconnection, the regional grid operator serving both states.
Massachusetts calls its utility default Basic Service. Each utility — Eversource, National Grid, and National Grid Nantucket — sets its own Basic Service rate, which the DPU approves on a rolling basis. Commercial rates reset more frequently than residential. When wholesale prices are low, Basic Service can be competitive; when they are high, fixed supplier rates often win.
New Jersey opened its electricity market under the Electric Discount and Energy Competition Act (EDECA) in 1999. The utility default is Basic Generation Service (BGS). The NJ BPU conducts annual BGS auctions where competitive suppliers bid to serve default customers in blocks — so even default customers are technically served by market participants, but the rate is set through a regulated procurement process, not individual choice.
Washington DC opened its retail electricity market to competition in 2001. Pepco is the only electric distribution company in the District. The DC PSC sets the Standard Offer Service (SOS) rate that applies to customers without a competitive supplier. DC is a small market, but businesses in the District have the same supply-shopping rights as businesses in any other deregulated state.
Deregulation gives a business one lever that regulated-state businesses lack: the ability to shop the supply portion of the bill. Delivery charges — wires, meters, grid maintenance — are fixed by the utility tariff and cannot be negotiated or switched away from. Supply can be.
Comparing against your default rate is step one. Pull your most recent bill, find the supply or generation line, and note the rate in cents per kWh. That is the number to beat. Suppliers typically quote all-in supply rates for 12, 24, or 36 months. A fixed rate below the current default protects against rate resets and provides budget certainty — often the more valuable benefit for businesses than the per-kWh savings alone.
Contract terms matter as much as price. Check early termination fees, whether the quoted rate is fixed or indexed, and whether the quote includes capacity and transmission costs or passes them through separately. A lower headline rate with passthrough capacity costs can end up more expensive than a slightly higher all-in rate when peak demand periods drive capacity prices up.
A deregulated electricity market separates supply from delivery. The local utility still owns the power lines and responds to outages, but competitive suppliers — not the utility — sell the actual electricity. Businesses in deregulated states can choose any licensed supplier, lock in a fixed rate, or stay on the utility's default service. Regulated states keep both functions under one utility, and customers have no supply choice.
No. The utility keeps the wires regardless of which supplier a business picks. If the power goes out, call the utility — the supplier plays no role in outage restoration. Deregulation only separates who sells the electricity, not who delivers it.
Default service is the rate the utility charges customers who have not chosen a competitive supplier. Names vary by state — Standard Service Offer in Ohio, Basic Service in Massachusetts, Basic Generation Service in New Jersey, Standard Offer Service in Washington DC. Default rates are set by regulators and reset periodically; they are often competitive during periods of low wholesale prices but can spike when markets tighten. Comparing your default rate against supplier quotes is the first step in deciding whether to switch.
Texas has the most competitive electricity market in the country — there is no utility default supply rate; residential and commercial customers must choose a retail electric provider (REP). Ohio, Pennsylvania, Massachusetts, New Jersey, and Washington DC are partially deregulated: supply is competitive and customers can shop, but a regulated default rate exists for customers who do not switch. Most other U.S. states remain fully regulated, with the utility controlling both supply and delivery.
Each deregulated state publishes a Price to Compare — the utility's current supply rate in cents per kWh. Ohio and Pennsylvania post these on state-run comparison sites (Apples to Apples and PAPowerSwitch). Massachusetts utilities publish Basic Service rates on their own websites. New Jersey publishes Basic Generation Service rates by utility. Washington DC's Standard Offer Service rate is set by the Public Service Commission. Request quotes from licensed suppliers and compare the supply portion only — delivery charges stay the same regardless of who supplies the power.
Send us a recent bill and we will pull competitive supply quotes for your utility territory, compare them against your current default rate, and walk you through the numbers — free, with no obligation.
Get a free rate comparisonThe four-step process, and the contract terms to check before you sign.
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