How Deregulated Electricity Can Save You Money

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Glowing text reads, "Save on your electricity bill without unplugging anything." In the center, image of a glass bulb with lit filament floating in a human palm.

A great way to save money on your electricity bill is to cut down on how much energy you use. Unplug all the unused appliances. Turn your AC to the highest possible bearable setting. Make sure your house is weather-proof.

But there gets to be a point when you’ve unplugged every appliance and kept the AC as low as  possible.

And your electricity bill is still too high.

What is one to do? Well, if you live in a deregulated state, you can shop around. You can cut your cost per kilowatt hour (kWh) and save money on electricity without unplugging anything.

What does it mean to have a deregulated electricity market?

In states where the electricity market is deregulated for residential accounts, you can shop around for who generates your electricity.

The company that delivers your energy — and issues your monthly bill — will remain the same. It’s just that you’ll get to dictate who you’re buying the energy from.

Some of the companies that generate electricity can save you money on your electricity bill by charging a lower price per kWh than the company that delivers your electricity.

States with Deregulated Electric Utilities

You can shop around for your electricity provider as a residential customer in these states:

The District of Columbia also has a deregulated electric market.

Things to Watch Out For

When you pull up your state’s online market, you’ll likely be asked for your zip code and average energy usage. You’ll then see a list of different providers offering service at different price per kWh.

That doesn’t mean you should select the contract with the lowest price per kWh, though. There are some things to look out for.

Short-Term Contracts

Short-term contracts tend to offer great rates, but those rates are more likely to skyrocket after your initial contract expires.

Variable-Rate Contracts

You may be offered a contract with a low price per kWh, but the rate is variable. That means the rate can change throughout the course of your contract, potentially jumping up dramatically.

Early Cancellation Fees

Let’s say you manage to find a long-term contract with a decent, fixed rate. Next, you’ll want to check the contract for early cancellation fees. These fees can be hefty, so you want to ensure you’re completely comfortable with everything in the contract before signing on the dotted line.

You should also look out for these fees in variable-rate contracts, where they can be even more detrimental.

Shop Green Energy

There are reasons to switch the company that generates your electricity that don’t necessarily hinge on saving money. Deregulated electricity markets also allow residential consumers to bring more green energy onto the local grid through Renewable Energy Credits (RECs).

Green energy providers will be labelled as ‘renewable energy’ providers on your state’s site. They’re likely still listed the same way as other providers, by kWh.

In today’s environment, renewable energy generators aren’t necessarily more expensive than your default option. In some situations, they can even save you money.

23 thoughts on “How Deregulated Electricity Can Save You Money

  1. Modest Money

    That’s cool that you get the choice about who generates your electricity. I’d think that would create some healthy competition to keep prices low and also encourage environmentally friendly practices. Here in BC, the government handles electricity. So we have no say in the matter and just pay whatever they charge.

  2. Michelle

    Our bill went up from $90 in May to $110 in June. I’ve been turning it up to 80 when we leave the house (if I remember!), unplugging things, pretty much leaving the lights off and living in a cave during the day, and it’s still high because of this heat! I’m one of those weird people that doesn’t mind the heat, but I have kids and can’t really make them live in a sauna. That might be frowned upon by some. :0)

    1. femmefrugality

      Haha same story here. I do mind the heat, but I could live with it if it would save me oodles of money. But that money doesn’t matter when you’re looking at little ones and risks of heat stroke etc.

  3. Maggie

    I hear you about the heat! We signed up for some kind of program where we agree to have our AC cut back during heat waves. They paid us about $35 for doing this. So far it’s been ok, but I’m wondering if it was the wisest thing to do!

    1. femmefrugality

      I’d love to do that someday. I’m not sure how effective it would be in my area…we have a lot of overcast days in the region, but I’d love to be self-sufficient as far as energy goes.

  4. MyMoneyDesign

    Yo Gabba Gabba!! 🙂

    I was not aware that you could switch your electric providers. It seems like in my area (MI) its pretty well tied to one company. I may have to look into this …

    1. femmefrugality

      Ours is, too. Or was. About a year ago we started getting all these offers from other companies. I blew it off as junk mail until I learned about this initiative.

  5. Meredith

    I am sending this post to my husband. We signed up last summer for that program where the power company automatically shuts off your a/c if it gets to hot to help prevent a brownout in the area, but this is a good idea too! Thanks!

  6. Anthony Thompson

    It’s so unfortunate that there are some people without heat during one of the hottest recorded heatwaves in history. It’s great that PA has such a electricity savings option. It sounds like a very good program.

    1. femmefrugality

      There’s tons of people around here without AC. It’s doable, but sucks during heat waves like this. I used to live in the south, though, and I couldn’t even imagine….

  7. AverageJoe

    We have two providers here, but I’m not confident enough in the new competitor to switch. I always am afraid that I’ll switch providers and find out that the new one was the wrong move….

    1. femmefrugality

      It would be awesome if they did this in some Southern states like FL and GA. If there’s only one option, it’s not like you’re going to be turning it off in regions like that. AC is what allowed so many people to migrate to the south!

  8. Tackling Our Debt

    Our electricity bill has actually droppped by $50 a month because we no longer have the furnace on. We are now in a heat wave of around 88 F. but in our location most homes don’t have AC so we just live through it. It is difficult to sleep and we can’t cook, but we still save that $50 a month.


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