"My state deregulated, so shopping saves money." Not on its own.
Marketing copy makes residential energy shopping sound simple: pick a cheaper supplier, save money. The reality is that the supplier you can switch only sells one slice of your bill. In retail-choice states the shoppable supply portion is now roughly 40 to 50% of the total. The other 50 to 60% (delivery, public-benefit charges, taxes, climate riders) is identical no matter what you do.
The arithmetic is straightforward and harsh: a 15% supply discount becomes 6 to 8% off the all-in bill. The 20% discount a salesperson promises on the doorstep gets reduced by the same math, then often eroded further by a teaser-then-step-up renewal structure, a non-trivial early-termination fee, or a "monthly customer charge" the supplier added to the contract that you only read in the small print.
Two structural exceptions actually deliver: disciplined fixed-rate shopping in ERCOT-grid Texas (where the entire supply portion can be shopped and the market is mature), and municipal aggregation in Illinois, Massachusetts and a few other states (where a city negotiates a single rate for every household at once). Outside those, the default-service rate set by your state PUC auction is often the safest baseline.
Read the rest of this guide event-by-event. The next 18 months are unusually consequential for liberalized states because of the July 2025 PJM capacity auction.
What liberalization actually changed on your bill.
Three layers in every modern US bill. Only one of them is shoppable. Source: EIA Electric Power Monthly.
Supply (40 to 50%)
The kWh themselves: generation cost plus capacity charges from the wholesale market. In retail-choice states this is the line you can shop. Default-service customers stay on the utility's auctioned price-to-compare; switched customers pay whatever they contracted for.
Delivery (35 to 45%)
Transmission and distribution: the wires, the substations, the meter, the line crews, the storm response. Regulated monopoly. Identical regardless of who supplies your kWh. Approved by your state PUC through periodic rate cases that you can comment on.
Riders + taxes (10 to 20%)
Public-benefit charges (low-income assistance, energy efficiency, renewable portfolio compliance), state and local taxes, gross receipts, franchise fees. Set by statute or PUC order. Not shoppable. Not affected by switching suppliers.
The arithmetic salespeople hide. If supply is 45% of your bill and a supplier offers "15% below default", the all-in discount is 0.15 x 45% = 6.75% off the total. A $200 monthly bill becomes $186.50, not $170. That is still real money over 12 months, but it is not the 15% headline the contract suggests. Now subtract any monthly customer charge the supplier added, divide by the chance of an unfavourable renewal, and the expected value gets thin fast.
Your bill by ISO and by state.
What the supply line covers, what is locked in delivery, and the rule that moves your rate most. Verified against state PUC and ISO sources, May 2026.
| State | ISO/RTO | Shoppable supply share | Rule that moves rates most in 2026 |
|---|---|---|---|
| Texas (ERCOT) | ERCOT | ~60% (no capacity charge) | RTC+B redesign (Dec 2025), scarcity events |
| Pennsylvania | PJM | ~45% | PJM 2026/27 capacity auction passes through in June 2026 |
| Ohio | PJM | ~45% | PJM 2026/27 + Electric Security Plan reset |
| New York | NYISO | ~40% | Dec 2023 Reset Order (5% guaranteed-savings rule) |
| Illinois (ComEd) | PJM | ~45% | PJM 2026/27 lands hardest on ComEd |
| Illinois (Ameren) | MISO | ~50% | MISO seasonal Planning Resource Auction (lower volatility) |
| Massachusetts | ISO-NE | ~45% | Forward Capacity Market + winter gas constraints |
| Maryland | PJM | ~45% | BGE zonal capacity premium ($466.35/MW-day in 2025/26) |
The shoppable share moves with the local capacity auction, the state's default-service procurement rules and any policy rider that lands on delivery. Two homes in the same ZIP code on different utility default-service tariffs can see meaningfully different bills even though they buy from the same competitive supplier.
Four episodes when wholesale volatility hit households.
Each event hit a different state, a different product structure and a different consumer pocket. Together they explain why default-service customers usually outperform aggressive shoppers over a 5-year window.
A Jan 2014: Polar vortex, PJM
A multi-week Arctic blast pushed PJM real-time prices above $1,000/MWh repeatedly. Variable-rate retail customers in PA, OH, IL ComEd, NJ and NY received bills 2 to 5 times normal. AGs in PA and OH opened investigations into a dozen suppliers. Several were barred from re-entering the market.
B Feb 2021: Winter Storm Uri, ERCOT
ERCOT spot prices stuck at the $9,000/MWh cap for 87 hours. Fixed-rate retail customers were largely protected (suppliers absorbed the loss, several went bankrupt). Indexed-to-spot customers (most famously Griddy users) received bills above $5,000 for the month. PUCT banned indexed-to-spot residential plans within weeks. Source: ERCOT 15 Feb 2021 release.
C Winter 2022: Gas crunch, multi-state
Russia-Ukraine war pushed US Henry Hub spot gas to ~$9/MMBtu. Default-service auctions in PA, OH, MD, NJ cleared at roughly double the prior-year rate. Even fixed-rate retail customers up for renewal saw step-up quotes of 30 to 70%. NY ESCO bills triggered the December 2023 Reset Order.
D Jul 2024 + Jul 2025: PJM capacity auctions
The 30 July 2024 PJM 2025/26 auction cleared at $269.92/MW-day (9-fold YoY jump). The 22 July 2025 PJM 2026/27 auction cleared at $329.17/MW-day, the maximum allowed under the new Net CONE cap. Bills in 13 PJM states will reflect the second jump from June 2026. Source: PJM news release, 22 July 2025.
Pattern recognition: every episode hit variable-rate or indexed-to-spot products first, default service last. The boring discipline of utility default service routinely outperforms the marketed alternatives once you measure across a full weather cycle.
The June 2026 PJM step-up: what it adds to your bill.
If you live in IL ComEd, OH, PA, NJ, MD, DC, VA, DE, WV, NC (Duke + Dominion in PJM), IN (AEP) or MI (DTE/Consumers in PJM territory), this is the most consequential market event of 2026 for your bill.
PJM RTO-wide, $/MW-day
2026/27 cleared 22 July 2025. The maximum allowed under FERC's new Net Cost of New Entry cap.
Year-on-year
Up from $269.92/MW-day for 2025/26. Which was itself a 9-fold leap from the prior $28.92.
PJM capacity bill, 2026/27
Total cleared supply x clearing price. Up 9.5% from $14.7B the year before. Passed through to retail customers from June 2026.
Estimated monthly step-up
Typical residential bill impact in PJM zones (varies sharply by utility). BGE customers in MD saw +$16 monthly from the prior auction; the 2026/27 layer adds more.
Three things the step-up actually means
- A The step-up is in the capacity line, not the energy line. Read your bill carefully. Most PJM utilities print capacity as a separate item ("Capacity Charge", "Generation Capacity Cost"). The energy ¢/kWh may not move; the per-month or per-peak-kW line will.
- B Locking a fixed-rate retail offer BEFORE the auction price is fully baked in defaults can save real money. Some retail suppliers pass capacity through volumetrically as part of an all-in ¢/kWh; if you lock now you may capture today's curve before quotes reprice in late 2026.
- C The step-up is signalling "build more plants here", not "policy is too expensive". The auction cleared at the Net CONE cap because plant retirements and data-center load growth pushed required capacity up faster than new capacity could enter. Until new gas, battery and renewable plants are built and accredited, the price stays at the cap.
Why default service usually beats retail shopping.
Four structural reasons the boring price-to-compare line on your bill outperforms most marketed alternatives over a 5-year horizon.
Default-service auctions are laddered, retail offers are point-in-time
Utility default service is procured through monthly, quarterly or semi-annual auctions that layer hedges over time. A retail offer locks in one moment's view of the forward curve. When that view turns out to be too optimistic (PJM July 2024 + July 2025), the retail customer is stuck at the wrong price for the term. The default customer keeps re-blending.
Acquisition cost gets recovered from you
A retail supplier paid the door-to-door agent, the call center, the marketing platform and the credit-risk reserve to win you. That cost lives inside the rate you pay. Utility default service has no marketing cost. Studies in NY, IL, PA and OH have repeatedly found this gap explains most of the "shoppers paid more" finding.
Variable-rate exposure is asymmetric
If you sign a variable-rate or month-to-month offer, the upside is bounded (a small saving in mild weather) and the downside is unbounded (bills 2 to 5x normal in a polar vortex). 2014 PJM, Feb 2021 ERCOT and Winter 2022 gas crunch each produced this asymmetry. Default service was protected each time. Switched variable customers were not.
Renewal terms are the trap, not the headline rate
Most fixed-rate retail contracts auto-renew to a variable rate (or a much higher fixed rate) unless you cancel. The supplier sends one notice, often by email, often months before the date. Miss it and the next bill is the disappointing one. Default-service customers do not have this trap because there is no contract to expire.
Two exceptions where the boring discipline does NOT win: ERCOT-grid Texas where the supply is competitively-only (no default service) and disciplined shopping on Power to Choose is the right baseline; and municipal-aggregation programs in IL, MA, OH, where a city negotiates rates for tens of thousands of households at once and the buying power overwhelms the acquisition-cost penalty.
Six concrete steps you can take this week.
Find your price-to-compare
Pull last month's bill. The PTC (or your supplier's effective ¢/kWh) is the only number that matters when shopping. Write it down before you talk to any salesperson.
In PJM states: lock before June 2026
If you are in IL ComEd, OH, PA, NJ, MD or DC on variable or month-to-month, the July 2025 capacity auction lands on bills from June 2026. A fixed-rate quote secured before then can capture the pre-step-up curve.
In ERCOT: shop on Power to Choose
Use Power to Choose and filter by ZIP, contract length and "average price at 1,000 kWh" matching your actual usage. Avoid plans with bill credits that vanish if you fall below a kWh threshold.
In NY/IL: trust the Reset Order rule
NY now requires every residential ESCO product to beat the utility default by at least 5% guaranteed. IL has done equivalent enforcement via the ICC. If a supplier cannot show the guaranteed-savings calculation in writing, the offer is not compliant.
Check whether your city has aggregation
Municipal or community aggregation in IL, MA, OH, CA (CCAs) often delivers a better rate than individual shopping. Your city or county website is the place to look. If you are already enrolled, you are usually already saving without doing anything.
Use the FTC 3-day cooling-off rule
For any door-to-door sale over $25 (including energy supply), federal law gives you 3 business days to cancel without penalty. OH gives 7 days. Use it. Source: FTC cooling-off rule.
Common questions about US energy liberalization.
It unbundles your bill into a "supply" line (the kWh themselves) and a "delivery" line (the wires that bring them). The supply line becomes shoppable. The delivery line stays a regulated monopoly. In a typical retail-choice state in 2026, supply is roughly 40 to 50% of the bill. The other 50 to 60% (delivery, taxes, riders, public-benefit charges) is identical whether you stay with utility default or switch suppliers.
18 states plus DC for electricity: Texas, Pennsylvania, Ohio, New York, Illinois, Massachusetts, Maryland, New Jersey, Connecticut, Rhode Island, Maine, New Hampshire, Delaware, DC, plus partial choice in Michigan, California, Oregon, Virginia and Nevada. A different set of states allow residential natural gas choice. The deregulated-states map is the canonical reference, refreshed against state PUC sources monthly.
Sometimes. Three honest cases. Texas on the ERCOT grid: yes, disciplined shopping on Power to Choose and a fixed-rate plan with the right kWh assumption typically beats default service. Municipal aggregation in Illinois and Massachusetts: yes, the city-negotiated rate generally beats utility default. Individual ARES/ESCO shopping outside those structures: mostly no. New York's December 2023 Reset Order and Illinois' 2024 ICC complaints all stem from the finding that average residential shoppers paid more, not less, than default service.
In retail-choice states the regulated utility procures default supply through a competitive auction (monthly in NY, quarterly in OH and IL, semi-annually in PA) and prints the resulting cost on your bill as the "price-to-compare" or "PTC". This is the rate you should benchmark a competitive offer against. If a supplier cannot beat the PTC on a fixed term with no hidden fees and a transparent renewal, walk away. Sources: PA PUC shopping, Energy Choice Ohio.
Winter Storm Uri pinned ERCOT spot prices at the $9,000/MWh system-wide offer cap for 87 hours straight. Most Texas customers on fixed-rate retail plans were unaffected (their supplier ate the loss, in several cases going bankrupt). A small number of customers on indexed-to-spot plans (most notoriously Griddy customers) received bills above $5,000 for a single month. The PUCT banned indexed-to-spot residential products almost immediately after Uri. Source: ERCOT emergency alert release, 15 February 2021.
The PJM 2026/2027 capacity auction cleared on 22 July 2025 at $329.17/MW-day, the maximum allowed under FERC's new Net CONE cap. The total cleared supply bill is $16.1 billion, up from $14.7 billion the year before. PJM utilities (BGE, ComEd, PEPCO, AEP Ohio, Duquesne, PPL, FirstEnergy, Dominion) pass the capacity cost through to retail customers as a separate line item, starting with the June 2026 delivery year. Customers in IL ComEd, OH, PA, NJ, MD and DC are the most exposed. Source: PJM 22 July 2025 release.
Because the contract allows the supplier to change your rate every month, with no cap, no notice and no obligation to track wholesale costs. The 2014 polar vortex, the 2022 winter gas crunch and the 2024 PJM capacity-auction shock each produced documented variable-rate bills 2 to 5 times the local utility default rate. New York's December 2023 Reset Order and Illinois' 2024 ICC complaints have effectively retired variable mass-market products in those two states. Outside them, variable rates remain legal and remain a primary source of complaint at every consumer-advocate office. The Citizens Utility Board in IL and the OUCC in IN both keep an active complaint dashboard.
Pull last month's bill, find the "price-to-compare" or PTC line (in TX, the average price per kWh including base charge). Write that number down. Then visit your state's shopping site (Power to Choose for TX, PA PUC for PA, Energy Choice Ohio for OH, Plug In Illinois for IL, NY DPS for NY) and compare. If you cannot find a fixed-rate offer that beats the PTC by at least 5% on a 12-month or 24-month term with no early-termination fee, stay on default service. It is the simplest discipline that consistently outperforms 90% of residential shoppers over a 5-year horizon.
Keep learning about US energy markets
What is a wholesale electricity market
Seven US ISO/RTOs, marginal pricing, capacity auctions and what moves your bill.
Deregulated states map
State-by-state status of electricity and gas retail choice in the US.
Introduction to competition
PURPA, EPAct 1992, FERC Orders 888, 889, 2000 and 2222 in plain English.
Alternate supplier vs utility
Who does what, who bills you, who handles outages, side by side.
Deregulation and the environment
Did wholesale competition help or hurt the energy transition? Mixed answer.
Electricity prices per kWh
EIA-verified state-by-state residential prices, May 2026.
Incumbent electricity suppliers
The legacy utilities that own the wires and provide default supply.
Who regulates US energy?
FERC, state PUCs, consumer advocates and where their jurisdictions meet.
New York: 1998 to 2026
NYISO, the Reset Order and the $50M April 2026 ESCO settlement.
Illinois: ComEd, Ameren and PJM
Why the PJM 2026/2027 auction lands hardest on ComEd customers.
Texas energy hub
ERCOT, retail providers, rate plans and the RTC+B redesign.
Understanding your bill
Line-by-line decoder for residential US electricity and gas bills.