Last Updated on October 6, 2021 by Mary Pressler
Average Electricity Costs & The Effect of Energy Deregulation
The History of Energy Deregulation in the United States
Electric utilities operated as state-regulated monopolies during most of the 20th century, controlling the entire electricity supply chain: generation, transmission, distribution, metering and billing. However, oil sector volatility raised electricity prices after the 1970s, and deregulation was introduced to create a more competitive and efficient energy sector.
Energy Policy Act of 1992
The Energy Policy Act of 1992 allowed states to create competitive energy markets for private generators, and where energy retailers could purchase at wholesale rates to sell electricity directly to the end customer. As of 2021, there are 26 states that have implemented some form of energy choice: 6 have deregulated electricity (including Texas), 9 have deregulated natural gas, and 11 have deregulated both services.
Consumer Choice Electricity
Since deregulation seeks to increase efficiency in the energy sector, transmission and distribution remain under the control of a regulated utility company. The alternative would be allowing electricity providers to build individual power grids, which is neither practical nor financially viable. Energy consumers in deregulated states purchase electricity from their electricity retailer of choice, and pay a transmission and distribution fee to the utility company serving their area.
List of Deregulated States in 2021
There are currently 26 states with deregulated energy sectors:
- Deregulated electricity (6): Texas, Connecticut, Delaware, Maine, Massachusetts, New Hampshire
- Deregulated gas (11): Florida, Georgia, Indiana, Kentucky, Montana, Wyoming, California, Kansas, Nebraska, New Mexico, West Virginia
- Deregulated electricity and gas (9): Illinois, Maryland, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Michigan, Virginia
Read more about the US states with deregulated energy.
Average Electricity Rates by State
The following table shows the status of electric deregulation in the 50 states and the District of Columbia, as of 2021. The table also provides average electricity prices for residential and commercial consumers (Source: US Energy Information Administration).
kWh Price (Avg)
kWh Price (Avg)
|East North Central||3/5||13.27||10.11|
|West North Central||0/7||10.88||8.88|
|District of Columbia||No||12.96||11.90|
|East South Central||0/4||10.83||10.49|
|West South Central||1/4||11.01||7.93|
*Average electricity prices are from the US EIA