You may have heard the term "deregulated market" thrown around, but what does it actually mean for you? Let's break it down.

What Does "Deregulated Market" Mean?

When a market is deregulated, it simply means that government influence has been removed or considerably downsized from a particular industry. In a regulated market, consumers have no choice but to buy a product or service from only one provider. Although 17 states have some form of energy deregulation, many states still have only one option when it comes to who they purchase their energy from. Proponents of deregulation argue that it is better for both the economy and the consumer — competition drives down costs and creates incentive to offer a better product or service, giving consumers the ability to choose the rates and services that best fit their needs.

What Are the Deregulated Energy States?

Energy deregulation in some form currently exists in California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas, and Washington D.C.

When Was the Energy Market Deregulated in Ohio?

Natural gas deregulation in Ohio first came about in 1997, but it wasn't until 2001 that Senate Bill 3 took effect, giving consumers the ability to choose between energy suppliers. During the first five years of deregulation, the law instituted a 5% decrease in residential rates and required a rate freeze until 2005. Since 2009, the Public Utilities Commission of Ohio (PUCO) has been required to approve all rates. After seeing the success of deregulated energy markets across the U.S., more states are putting energy deregulation on the ballot.

How Does Deregulated Energy Work?

If you live in a deregulated area, you have several choices for where you want to source your energy — not just one. Companies offer to sell their energy at the lowest rate while independent agencies buy the amount of energy they anticipate needing over a set period of time, which determines the rates they charge customers. Customers still work through their local utility company, but their power and bills will come from the supplier they've chosen.

Why Is Deregulation Necessary?

Deregulation — and therefore competition — is necessary in a society that values high quality and affordability. Competition drives suppliers to provide the best service at the best possible rates, meaning customers reap the greatest rewards. Consumers also gain the ability to choose more energy-conscious suppliers, something that simply couldn't happen in a regulated market. It's because of energy deregulation and supplier competition that Ohio residents and business owners enjoy lower rates and better service today.

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