How States Broke Utility Monopolies with Energy Competition
At the Alliance for Competitive Power (ACP), we’ve celebrated alongside energy leaders and consumers as states dared to reimagine the way you buy electricity.
As we navigate through 2026, these stories are reaching a new chapter. With electricity demand surging to record levels due to AI data centers and manufacturing reshoring, the competitive models in states like Texas and Pennsylvania are being tested and refined like never before. Pull up a chair, let’s dive into the "real-world" of energy choice.
Cracking Open the Old Utility Playbook
Cast your mind back to the late 1990s. At that time, every household across America had one local utility to buy from, that was your only option. The winds of change blew in, powered by folks who believed you deserved more say on where your energy comes from and how much you pay.
By shaking up these sitting monopolies, states hoped to kickstart innovation and let market forces spark new choices. As explained in this Constellation Energy primer on deregulation, that shift offered the promise of lower costs and new opportunities by breaking the mold of single-provider power.
Which States Took the Plunge?
Roughly 18 states plus D.C. have some version of deregulated electricity markets, each tailoring their approach. According to Electric Choice’s market map, there’s no cookie-cutter blueprint. Some states offer full retail choice for everyone, while others limit competition to large commercial users. Regardless of the specific model, the outcome remains the same: more competition means more fresh ideas for you.
The Texas Blueprint: Freedom to Choose in 2026
If you ever chat with a Texan about picking an energy plan, you’ll hear a little pride seep in. Texas didn’t just shake things up, they made open competition the standard. Whether you’re running a business or raising a family, you have a buffet of providers just waiting for your call.
In 2026, Texas is pushing the envelope further with Virtual Power Plants (VPPs). The state’s grid operator (ERCOT) is now using market incentives to pay homeowners for the power stored in their EVs and home batteries to keep the grid stable during peak demand. This type of flexibility is a hallmark of the Texas energy market, which adapts faster to consumer needs than traditional monopoly systems.
Pennsylvania & Illinois: Consistent Progress
Texas may grab headlines, but states like Pennsylvania and Illinois built standout models, too. In Pennsylvania, freedom of choice for both residents and businesses carved a healthy, buzzing marketplace.
Illinois took a different tack: first opening up natural gas in '93, then carefully phasing in electricity competition. By going slow and learning along the way, Illinois sidestepped some potholes and built trust with consumers, as documented in various deregulation timelines.
When Things Hit a Bump: Lessons from California
Not every state’s path has been smooth. Take California-in the early 2000s, their bid to open the market ran into trouble with an infamous energy crisis. The state took a step back, yanking back some consumer choice to stabilize things.
Nowadays, California offers only a slice of retail freedom for large users. This experience taught us a major lesson: real success isn’t just about inviting competition, but also making sure you’ve got solid rules and strong guardrails. We get into these lessons in more depth on our FTI Study Results page.
Competition Fuels the Renewable Revolution
You might be surprised at how much energy competition matters for clean power. In 2026, renewables are projected to make up 36% of the global power supply, and competitive markets are the fastest at integrating them.
Open markets adapt swiftly to new tech and shifting customer tastes, offering you renewables that match your values. Because suppliers in these states must compete for your business, they have a strong incentive to offer the greenest, most affordable plans available.
Your Experience in a Deregulated Market
So, what changes for you? In deregulated states, energy companies actually have to win you over. That competition brings down prices and fuels creativity. EnergyBot's rundown on energy deregulation spells out the array of shopping options you get-including the power to opt for renewable plans or lock in the best rate for you.
Our research-rich FTI Study Results page dives into how these competitive markets slow rising prices, slash emissions, and keep the lights on more reliably than most monopoly-run systems.
Frequently Asked Questions About Breaking Utility Monopolies
What’s the difference between regulated and deregulated markets? In regulated markets, you’re stuck with one provider; in open markets, you get to choose from multiple suppliers.
Which states have the most choice in 2026? Right now, Texas, Ohio, and Pennsylvania lead the pack in residential participation.
How does competition affect renewables? In open markets, the market signals, not a regulator, decide which plants are built. This has led to solar and wind catching on much faster as they've become the most cost-effective choices.
Where can I see the latest updates? Check out EnergyBot or our own News page for the latest on state-by-state energy choice.
Conclusion: A Future Built on Choice
Putting power in your hands works. States that opened their electricity markets not only let you shop around and lock in savings, but they’ve also transformed how the industry thinks and invents.
Hungry for more? Head back to our ACP homepage or reach out to us directly. Let’s keep rewriting the energy script together, one smart choice at a time!
