Here’s How to Save on Your Energy Bill in States With Deregulated Markets
Did you notice your utility bill go down in the fall of 2024?
If so, you’re not alone. According to data collected for PocketSmith’s Global Spending Map, Americans saw a reduction in their year-over-year utility bill spending in October 2024, down by a whopping 12% from October 2023. This was preceded by a smaller dip in September.
“This is the most significant year-over-year drop we’ve seen among our userbase since we started collecting data in 2017,” said Dora Yip, CMO of PocketSmith. “The only other time it even got close was when we saw a 10% drop year-over-year between August of 2021 and 2022.”
Some of this can be attributed to a hotter-than-normal autumn across the nation, which reduced the demand for natural gas. That means when Americans used natural gas, the price was lower than usual. Depending on where you live, the price per kilowatt hour for your electricity may have been lower, too.
But PocketSmith doesn’t expect these reductions to stick. Projections for 2025 show electricity prices may see a modest reduction or stay the same. Though if you live in certain states like California, you can almost assuredly expect a price increase over the next year.
Natural gas prices are expected to rise dramatically this year compared to 2024 (though it’s not likely to be as expensive as it was in 2022.) That’s in addition to the seasonal price inflation we see every winter when demand for heating gets higher. But, we know how you could potentially save on your utility bill.
An Innovative Way to Make Your Utility Bills Lower
While you may have enjoyed a brief period of lower utility spending in the fall, what can you do to prepare for the price increases that are likely around the corner? Odds are you’ve already tried to use less energy.
You probably already replaced all the incandescent light bulbs with LED bulbs and scheduled regular maintenance of your HVAC system. You may have even installed a programmable thermostat or used Inflation Reduction Act credits to purchase new, energy-efficient appliances.
But there’s a bigger change you can make that can reduce the amount you’re spending without necessarily reducing your usage of natural gas or electricity. The secret is shopping around for who generates your electricity or sources your natural gas. Doing so is completely possible if you live in a state with a deregulated energy market.
What Does It Mean to Live in a Deregulated Energy Market?
In about half the country, utility companies generate and deliver energy. You don’t get to shop around for utility companies; you’re assigned one based on your address.
But about half of the 50 states have deregulated residential energy markets for either electricity or natural gas – sometimes both. In states with deregulated energy markets, that same, assigned utility company will still deliver your energy. In fact, in most states they’ll still deliver your energy bill to you every month.
But you can shop around for who generates the energy you consume. Some third-party utility companies will offer a lower price per billable unit, meaning you’ll pay less money while maintaining the same energy usage.
What to Look for When Shopping Utility Companies
There are a few red flags to look out for before you shop around for a new company to generate your energy. Carefully read a contract before signing.
How long is the contract?
First, you’ll want to see how long the contract lasts. Short-term contracts aren’t great because they generally come with a too-good-to-be-true rate. This rate will help you save money at the beginning, but the savings aren’t likely to last.
When the contract expires, you’re likely to face rates that are less generous than the competition. At that point the utility company is hoping you’ll stay on at a higher rate because of inertia. The alternative is going back to shopping the market again to find a better deal.
Conversely, if the contract is too long, that can be a red flag, too. The sweet spot is generally somewhere between 12 and 18 months.
Are there cancellation fees with this utility company?
Contracts of all lengths can come with early cancellation fees. When you have a longer contract, you’re more likely to need to duck out early, making those fees a bigger problem. If there’s a possibility you might move before the contract expires, these fees are even more concerning.
Fixed or variable rates?
Those with longer-term contracts will want to take note of whether rates are fixed or variable. Variable rates can be dangerous, as they have the potential to either gradually snowball or suddenly skyrocket.
If you find yourself looking at a longer-term contract with variable rates that also comes with early cancellation fees, you should not sign. Look for another company to generate your electricity, even if the initial rate offered is slightly higher.
Can I Save on my Energy Bill While Going Green?
Green energy suppliers are available primarily in deregulated electricity markets. Many companies market themselves as ‘green’ or ‘renewable,’ but the best will operate at 100% renewable energy, using sources like solar or wind. Because you can select a green energy provider in deregulated markets, you can effectively add green energy to the grid — even as a renter who can’t set up solar panels on your own roof.
In many instances, selecting a renewable energy generator is less expensive than the default rate you’re paying on your electricity bill. Though affordability will vary.
Which States Have Deregulated Markets?
Now that you know what to look for, you can shop around to save on your utility costs. Make sure you’re getting the best rates by checking the deregulated energy markets in the following states.
California: Natural Gas
In California, you can shop deregulated natural gas markets to save on your energy bill. The minimum contract length is 12 months. You will have to contact each provider for current rates, making sure you’re only contacting the companies that provide residential services.
If PG&E delivers your natural gas, you can check their list of alternative companies that provide residential services.
Connecticut: Electricity
Connecticut allows its residents to choose who generates their electricity with an easy-to-use online tool.
Delaware: Electricity
To shop electric utilities in Delaware, you will need to check out each individual company listed on the state’s website.
Florida: Natural Gas
In Florida, you can select who generates your natural gas – but only if you’re served by Central Florida Gas (CFG) based on where you live. In other parts of the state, residential customers don’t have a choice. They have to go with their assigned utility provider.
To find out current rates as a CFG customer, you’ll have to contact each provider.
Georgia: Natural Gas
Georgia is the same deal as Florida. You can choose who sources your natural gas – but only if you’re currently served by Atlanta Gas Light Company. You will need to check current rates with each certified marketer.
Illinois: Electricity & Natural Gas
In Illinois, residential customers across the state can shop around for both who generates their electricity and who supplies their natural gas.
Indiana: Natural Gas
Indiana operates similarly to Florida and Georgia in that you can choose the company that sources your natural gas, but only if you live in certain areas of the state. If NIPSCO is your natural gas supplier, you are eligible for the residential CHOICE program.
Iowa: Natural Gas
While Iowa technically has natural gas deregulation, it applies to very, very few people. You’ll have to live in the part of the state that is not served by one of the four big investor-owned utilities. And in order to qualify for state deregulation, the utility must not serve more than 2,000 people. From there, the utility must opt to offer a choice program. So while it’s technically possible and therefore worth checking to see if your service area qualifies, it’s not likely for most residents.
Kentucky: Natural Gas
If you live in Columbia Gas of Kentucky service areas, you have a choice of your natural gas supplier. At least for the time being. Columbia Gas is trying to shut down its program as early as 2025, but the state has told them the program must stay open through March 31, 2028. The end date is still undergoing back and forth through legal proceedings, but for right now it’s open. So shop around while you still can!
Maine: Electricity
While you do not have a choice of your natural gas provider as a residential customer in Maine, choosing who generates your electricity can help you save money.
Maryland: Electricity & Natural Gas
Residential customers in Maryland can choose the company that supplies their gas and the company that generates their electricity, allowing them to shop around for the best rates on both their heating and cooling bills.
Massachusetts: Electricity & Natural Gas
Massachusetts makes it easy for residential customers to save on their electricity bill with a dedicated website for comparison shopping. It’s a little more difficult to shop around for natural gas suppliers, but it can be done by following state directions and contacting each residential supplier listed on the state’s website.
Michigan: Natural Gas
You can shop around for natural gas suppliers in Michigan, and the state has a dedicated website for this purpose.
Montana: Natural Gas
As a residential customer, you cannot comparison shop utility companies for your electric bill in Montana.
But you can shop around for natural gas suppliers depending on which part of the state you live in. If you’re served by NorthWestern or Energy West, you can get a list of current alternative suppliers by calling the state’s Public Service Commission at 1-800-646-6150.
Nebraska: Natural Gas
If you live in the right part of Black Hills Energy’s service area, you can choose from these natural gas suppliers.
New Hampshire: Electricity
Residential customers in New Hampshire can choose the company that generates their electricity using the state’s search tool.
New Jersey: Electricity & Natural Gas
In New Jersey, residential customers can shop for who generates their electricity and who supplies their natural gas. The search process is organized by service area on the Board of Public Utilities’ website.
New Mexico: Natural Gas
Very few people qualify for the deregulated natural gas that technically exists in New Mexico. However, you can reach out to the natural gas marketers in the state to see if you’re one of the lucky few – and if they can offer you lower rates.
New York: Electricity & Natural Gas
New York state residents can save money on their heating and cooling bills through the state’s Power to Choose site. Both electricity and natural gas markets are deregulated.
Ohio: Electricity & Natural Gas
Ohio makes it easy for its residents to find electric or natural gas rates with one simple site set up for comparison shopping: Energy Choice Ohio.
Pennsylvania: Electricity & Natural Gas
The Pennsylvania Public Utility Commission also makes it easy for residents to reduce energy bills. You can shop for the best electric utility company using PAPowerSwitch. Natural gas suppliers can be compared using PAGasSwitch.
Rhode Island: Electricity
Rhode Island residents can save money on their electricity bill by shopping at Empower RI.
Texas: Electricity
About 85% of Texas residents can select who generates their electricity using the state’s Power to Choose tool.
Virginia: Electricity & Natural Gas
Residents of Virginia can shop for who generates their electricity and who supplies their natural gas. To do so, they will have to contact each individual company listed by the state.
Washington, D.C.: Electricity & Natural Gas
Residents of the District of Columbia can easily shop electric suppliers using DC Power Connect. You can also choose your natural gas supplier, with a full list of potential suppliers here.
Wyoming: Natural Gas
If you live in the right part of Black Hills Energy’s service area, you can sign up for Choice Gas – just be careful that the provider you pick actually saves you money. Choice Gas in Wyoming has an open enrollment period, which means you can typically only sign up during certain weeks of the month of April. The program is closed to new customers the rest of the year.
Does This Mean I Can Stop Obsessing Over My Hot Water Heater?
Let’s say you established some good energy-savings habits. You purchased Energy Star appliances. You’ve been careful to use the cold water setting when using your washing machine. During the warmer months, you’ve also taken to drying your clothes outside on the line to reduce your energy usage.
Now that you can get your energy at a lower price, does that mean you should stop these cost-saving measures?
Absolutely not! You’ll get optimal savings by both continuing those cost-saving measures and comparison shopping utility companies. Paying less while using less is the equation that lands you with the absolute cheapest monthly utility bill.
Pittsburgh-based writer Brynne Conroy is the founder of the Femme Frugality blog and the author of “The Feminist Financial Handbook.” She is a regular contributor to The Penny Hoarder.
Brynne Conroy is a contributor to The Penny Hoarder.
