Retail energy: How to shop for energy like you shop for anything else

When was the last time you shopped around for your utility services? If you're like most Americans, the answer is probably "never"—and you might not even know you have the option.

But here's the thing: If you live in a state with a deregulated energy market, you have the power to choose your energy provider the same way you'd pick a cell phone carrier or internet service. With high gas bills looming and skyrocketing electricity prices, understanding what retail energy is and whether it's available to you could save you hundreds—even thousands—of dollars.

Retail energy is the name for the competitive market where you, the consumer, can choose which company supplies your electricity or natural gas. Instead of being stuck with your local monopoly utility as your only option, you can shop around for a retail energy provider (REP) to find the best rates, plans, and services for your needs.

Think of retail energy providers as the suppliers in a two-part system. Your local utility will still own and maintain the lines that bring the electricity or gas to your home, so your delivery services will stay the same. But in deregulated markets, you can choose who generates—or supplies—that energy before it reaches those lines.

REPs are only active in deregulated energy markets, meaning you can only choose your energy provider if you live in select states. Most states are only partially deregulated, or have different levels of regulation for different energy commodities.

Currently, 28 states plus Washington D.C. have some form of energy choice, whether that’s for all energy customers, commercial and industrial (C&I) customers only, or for natural gas only. But only 14 states plus Washington D.C. offer residential electricity choice, and only 12 offer residential natural gas choice. The following table provides details on deregulated energy states and the services each offers.

States with deregulated energy markets for residents

If you live in a state with retail energy choice, there are several enticing reasons to shop around:

Save up to 20% on your electric bill

The most obvious benefit? Money in your pocket. When you shop for electricity, you can find rates that are significantly lower than your utility's default rate. Ben Hood, CTO and co-founder of WattBuy (a company that helps consumers shop for electricity), said their customers save up to 20% on annual electricity costs by switching to a competitive retail energy provider.

Lock in fixed rates to beat inflation

Many retail energy providers offer fixed-rate contracts (explained in the section below) that protect you from rising electricity prices. If you sign a 24- or 36-month fixed-rate plan, you'll pay the same rate per kilowatt-hour throughout your entire contract—even if electricity prices surge during that time, which they likely will.

“We've seen the numbers: Electricity prices are going up 6%, electricity inflation is 5% or 6%,” said Hood. “If you can find a 36-month fixed-rate plan, you lock in your prices for the next 36 months. So for three years you're not going to have that 5% or 6% inflation.”

Find specialized plans for your lifestyle

Competition means innovation, and retail energy providers have gotten creative with their plan offerings. Depending on your provider and location, you might find:

• Time-of-use plans with free electricity from 8 p.m. to 8 a.m.—perfect for EV owners who can charge their cars overnight

• 100% renewable energy plans that source all electricity from wind and solar

• Solar-friendly plans with better net metering rates if you have rooftop solar

• Demand response programs that pay you to reduce usage during peak times

These specialized plans let you align your electricity supply with your values and lifestyle in ways that traditional utilities often can't match.

"There are some exotic plans that are great for you to keep your eye out for if you have a special situation like an EV or a solar panel system or a battery in your garage," Hood said.

Better customer service

Unlike traditional utilities with guaranteed customers, retail energy providers must earn and keep your business. That means many REPs go the extra mile with customer service and may offer perks like mobile apps for energy monitoring, 24/7 support, or even promotional offerings like free smart thermostats.

When shopping for retail energy, you'll typically encounter two main plan types: fixed-rate and variable.

A fixed-rate plan locks in a specific price per kilowatt-hour for the duration of your contract (usually 12-36 months). This doesn't mean your bill will be the same every month—your total cost still depends on how much electricity you use. But your rate stays constant, giving you predictability and protection against price spikes.

With a variable-rate plan, your electricity price fluctuates based on wholesale energy costs. Your rate could change monthly, weekly, or even hourly, depending on your contract terms.

“Most of the time, the fixed rate plan is going to be better for people,” said Hood, highlighting that these plans offer the right balance of savings and predictability.

Though he added there are benefits to trying a variable-rate plan first: “If you're just not sure whether this plan is the right one for you, if you want to try out a company to see whether their customer service is any good, then you could maybe do a variable rate plan that's only for three months or even a month-to-month plan. But you will pay more for that, generally.”

If you live in a deregulated market and feel like you’re spending too much on utility bills, it’s smart to explore your retail energy options. Here's how to get started:

Step 1: Find out if retail energy is available in your area

Check your state's public utility commission website or enter your zipcode in an online tool like Wattbuy to confirm whether you have the option for retail energy choice.

Step 2: Compare your current rate

Look at your most recent utility bill to see what you're currently paying per kilowatt-hour—this is your baseline for comparison.

Step 3: Use a comparison tool

Rather than visiting dozens of provider websites individually, use an electricity shopping platform that shows you all available plans in one place. These tools let you filter by contract length, plan type, renewable content, and other preferences.

You can check if you're overpaying for your electricity for free on WattBuy. Its 90-second process may save you over $1,000 on your electric bills over the next three years.

Step 4: Read the fine print

Before signing up, carefully review the Electricity Facts Label (EFL) that providers are required to supply. This document breaks down exactly what you'll pay, including all fees and terms.