If your electricity company operates in multiple states or power grids, then there is a chance that you are operating in both a regulated and unregulated market. It is important to understand the differences between the two types of markets when choosing an energy supplier. Here is an overview of the different markets:

Regulated

A regulated market, as the name suggests, is when the entire market is controlled through vertically integrated monopoly utilities that are overseen by public regulators. It’s up to the utility to generate power, send it to the grid, and get it to customers. Customers in a regulated market cannot choose an energy provider and can only deal with the utility company in the area. Most of the markets in the southeast, northwest, and west are regulated.

deregulated

In the deregulated market, participants other than utilities can own power plants and transmission lines. This means that power generators sell their electricity on a wholesale market, from which retail power providers can buy the power and sell it to customers. The transmission network is owned and operated by transmission and utility companies. An unregulated market is managed by independent system operators (ISOs) or a regional transmission organization (RTO). There are still utility companies working to ensure power is distributed and everything runs smoothly.

The deregulation market has open competition from independent power producers in all 24 markets, including Texas and most northeastern states. Many of these states have also introduced the idea of ​​retail choice that allows residential and industrial consumers to choose an electricity provider. Customers in these states have more options and more competitive rates, even with renewable energy. It gets a bit tricky as some states, including California, are only partially regulated. There are several reasons for this, so make sure you know what to expect in your own state.

It can be difficult to develop a renewable energy project in a regulated state. It might even be impossible. Of course, you can still get renewable energy if you need it. You may have to enter into an agreement with an energy provider outside of your state, but the possibility exists nonetheless. If anything, choosing to “outsource” your energy in this way may encourage other states to adopt a more open market.

Summary

The main difference between a regulated and unregulated state is who is in control of the power and how many choices consumers have. Consumers in regulated states have no choice over their energy provider, but they do have guaranteed energy. Consumers in deregulated states have more options, may get better rates, but are at risk of things like energy tampering and other malpractices.