About Electric & Natural Gas Deregulation

Regulation of public utilities by federal and state governing bodies dates back to the 1930s and was instrumental in forming the vast infrastructure we have today. Without the oversight and a guarantee of financial return on investment, we would not have had the money or rules needed to build the reliable systems that now span the continental U.S. Through the years, there have been a number of regulations (Federal Power Act of 1935, Public Utilities Holding Company Act of 1935, Natural Gas Act of 1938, Public Utilities Regulatory Policy Act of 1978, Energy Policy Act of 2005, et. al.) that have helped shape the relationship between utilities and their customers. Though the rules have changed over time, allowing deregulation of the natural gas and electric industries, two things remain constant. Federal regulation of interstate commerce is performed by the Federal Energy Regulatory Commission (FERC), and regulation of intrastate affairs is handled by the respective state Public Utilities Commissions.

The electric and natural gas industries are very similar in their structure and operation. Each has three distinct components (i) the commodity SUPPLY portion (ii) the long-distance TRANSMISSION of the commodity and finally (iii) the local DISTRIBUTION of the commodity to our homes and businesses. For many years, your local utility handled all three phases of the business in a "vertically integrated" manner. After decades of growth, construction, and addition of market participants, it was determined that competition could safely be introduced via deregulation of the natural gas and electric industries. To address the needs of a competitive environment, those three phases of utility operations were separated, rearranged and in some cases sold off to other companies or regional transmission organizations.

Supply - Transmission - Distribution

Deregulation of the electric and natural gas markets came on the heels of deregulation in the airline, trucking and telephone industries. Those industries underwent drastic changes during periods of expansion and contraction. Today, airfare and phone rates adjusted-for-inflation, are considerably less than they were in the 1980s and many new products and services exist. In deregulation of the natural gas and electric industries, only the price of the commodity supply has been opened to competition. This means consumers in many states, who are served by investor-owned utilities, are now able to choose who supplies their natural gas and/or electricity. The transmission and distribution of natural gas and electricity is not open to choice, and the price for those services continues to be set by state and federally approved tariffs. The push for deregulation of natural gas and electric came when the FERC decided it should limit its authority to wholesale transactions. This move cleared the way for individual states to determine if and how they should allow retail price competition.

The table below shows which commodities have been deregulated for each state. In deregulated states, retail consumers are able to shop for a supplier other than their utility. The utility continues to deliver the natural gas or electricity regardless of who is chosen to supply the commodity. The utility also continues to maintain the distribution system, respond to emergencies and read meters. The reasons for choosing an alternate supplier can be many, but most consumers tend to seek (i) lower prices (ii) price stability not available with variable utility rates (iii) longer-term contracts or (iv) energy produced by environmentally friendly sources. Please note that not all areas of a deregulated state may be open to competition, or active at all times. Please contact Independent Energy Consultants with questions about deregulation of electric and natural gas in your particular market.

Electric and Natural Gas Deregulation by State With Links to State Utility Commissions

 

State Commodity State Commodity State Commodity State Commodity State Commodity
AL NG* ID NG* MN NG ND NG* VT NG*
AK NA IL EL & NG MS NG* OH EL & NG VA NG
AR NG IN NG MO NG OK NG WA NG
AZ EL & NG IA NG MT NG* OR EL & NG DC EL & NG
CA EL & NG KS NG* NE NG* PA EL & NG WV NG
CO NG KY NG NV NG RI EL & NG WI NG
CT
EL & NG* LA
NG* NH EL & NG* SC NG WY NG*
DE EL & NG ME EL & NG NJ EL & NG SD NG* EL Electric
FL NG MD EL & NG NM EL & NG TN NG NG Natural Gas
GA NG MA EL & NG NY EL & NG TX EL & NG * Available only to the Largest Consumers
HI NA MI EL & NG NC NG* UT NG* NA Not Applicable

 

 

Testimonials
  • "It has been my pleasure to work with Mark Burns in developing Green's electric and gas aggregation programs. Green was one of the first municipalities to initiate an aggregation program, and Mr. Burns' knowledge and drive were instrumental in getting this accomplished in a timely and cost efficient manner.

    The city of Green has saved its residents literally millions of dollars in reduced costs for both power and natural gas. Given Mr. Burns' extensive knowledge and customer responsiveness, I would recommend him unconditionally to coordinate any utility based study."
    Dan Croghan
    Former Mayor
    City of Green, OH
  • "Mr. Burns brings 22 years of experience and expertise in the fields of natural gas and electricity to governmental aggregation programs. His knowledge and experience, coupled with his awareness of and sensitivity to residential energy customers' preferences, makes it easy for a City to present a well-organized and cost-beneficial aggregation program to City residents.

    Mr. Burns is always ready to personally assist the individual resident in joining or leaving an aggregate group. He is always willing to explain the program to those residents that may have questions. He understands that governmental energy aggregates are made of people, not numbers.

    Mr. Burns watches the market trends and advises a governmental aggregator when to strike a price for an energy program. He tracks activity before the Public Utilities Commission and advises of issues that will impact municipalities so that we may address those issues. His advice and attention to our municipality has made my job much easier, and has resulted in professionally-run aggregate programs."
    Phyllis Vento de Crespo
    Former Assistant Director of Law
    City of Euclid, OH
  • "Thanks for all your hard work and perseverance. This program has been a huge positive in otherwise gloomy economic times."
    Township Administrator
  • "Most people turn to a quality atlas or a reputable consumer magazine when they need help planning a trip through unfamiliar territory or making an important purchase. I turned to Mark Burns, the founder of Independent Energy Consultants.

    Mark calmly, politely and successfully guided our city through every phase of our opt-in and opt-out natural gas aggregation programs. He also helped taxpayers, our city, and our council of local governments achieve significant savings on residential, small business and public building heating bills.

    Mark Burns is the consummate professional, knowledgeable, certified, neophyte-friendly, always available to answer questions, and always planning ahead. I give him thumbs up, way up."
    Joe Martuccio
    Law Director, City of Canton
  • "Thanks for the good job you are doing. I know the residents of the township appreciate the savings particularly in these difficult economic times."
    Township Trustee
  • "Mark,  I will send this out today - as is.  Thank you for your hard work, this program has been wonderful."
    Township Administrator