In the traditional model, there's only one local utility company for a given area, meaning you can't switch to an electric supplier. While that one-size-fits-all model is the case in many states (and at one time, it was also the reality in North America), you now have your choice of energy companies.

There are 31 states in the U.S. that offer a deregulated market to electricity and/or natural gas customers. This means that if you find another energy supplier offering better pricing or service, you can switch suppliers to one that works better for you!

Why is switching an option?

Before energy deregulation, utility companies did it all: producing or procuring the energy, owning and maintaining the power and gas lines, and delivering the electricity and natural gas to customers. However, because these monopolies had no incentive to improve service or find ways to offer customers better prices, many states moved toward a system to stimulate competition and the economy.

What is the deregulation of utility providers?

We call it "energy choice." Deregulation is now the law of the land, but utility companies remain. In some states, they still own and maintain the power and gas lines, and they purchase electricity and natural gas from the market and sell it back to you. Because deregulation is all about choice, other companies, often called "competitive suppliers," aside from the local utility, can sell energy to customers. These companies also purchase and sell energy from the market back to you, but they can now offer more competitive prices. A utility switch could provide better service, rates, or stability in these states.

What are the basics of energy choice?

To better understand how deregulation works for you, let's walk through the two components of your energy bill. Some states and companies may use different terminology, but the concepts are the same:

• Delivery fee: This fee goes to your local utility, which owns and maintains the infrastructure. When there's an outage in your area, you call your local utility to have service restored.
• Supplier fee: Because you can purchase your energy from either your local utility or from one of the competitive suppliers registered to do business in your state, the supplier fee goes to whichever company you choose to purchase your energy from.

If you're curious about switching electric suppliers, many states have created a way to help you shop around. Go to the Public Service Commission website for your state to review and compare the providers in your area. You'll be able to compare both prices and plans:

• Price: This is the price per unit of energy use. How much you use depends on your needs at home.
• Plan: This is the agreement that locks in that price for a set time.

Finding a competitive supplier

Competitive suppliers, like Direct Energy, offer more flexibility in pricing because, unlike many local utilities, their prices are not regulated by the utility company.

You may also be surprised by some of the extras that other energy companies offer to new and existing customers. For example, some offer home protection plans, which can give you peace of mind when your furnace breaks or you need a plumber. Another may offer an option to invest in green energy. Maybe you'll even qualify for a free thermostat that can be programmed and monitored remotely by your smartphone. Spend some time researching these possibilities so you're ready when it's time to switch to an electricity or gas supplier.

Planning a utility switch is easy!

A utility switch can be pretty straightforward. For starters, there is no fee or penalty to switch as long as you aren't currently in a contract. (You can learn whether you are by quickly calling your utility company.) All you have to do is visit the supplier's website, choose the plan that's best for you, and fill out an online form. Once you enter your identifying information, including your account number with your local utility company, you are all set, and you will receive a notification indicating your start date.

What happens after you switch?

Texas deregulated market: 

Switching energy companies is a simple, coordinated hand-off between your old provider and your new provider, and it won't interrupt service to your home. The local utility company for your area still owns all the equipment and infrastructure needed to transmit and deliver energy to your home. You’ll contact them to report any power outages.

Other deregulated states: 

The good news is nothing changes with your service. That hand-off occurs without any interruption to your electric or gas service. Best of all, there are minimal changes to your billing. Because your local utility company still handles the billing, you'll still see the same line items with the addition of "consumption," which will show the rate of your new supplier.