America began deregulating its energy market in 1992. Until then, consumers purchased electricity exclusively through their local electric company. But following the passage of the National Energy Policy Act, states began to deregulate and allow residents to purchase energy from third party electric suppliers instead of public utilities.
Despite this, many of the commercial and residential customers who have the option of working with third-party suppliers are still unaware of the service and benefits they provide. For homeowners and businesses searching for reliable energy plans, here is a short breakdown of third party electric suppliers: who they are, how they operate, and why you ought to consider signing up with them.
Third Party Energy Suppliers
Third-party electric suppliers, sometimes known as alternate energy suppliers, are independent companies that sell electricity to consumers separate from their local utility. In a traditional energy market, utility companies are responsible for the supply, sale, and transmission of electricity and natural gas. In a deregulated market, however, these functions are split between different entities.
- Producers. Generate electricity and harvest natural gas.
- Suppliers. Purchase gas and electricity from producers, for sale to their customers.
- Utilities. Own and maintain the pipelines and electrical grid that delivers energy to your home.
In order to respond to market demands, third party energy companies often partner with several producers. This flexibility helps customers manage their electricity costs and gives them access to a wider range of energy services.
States with Third Party Electric Suppliers
As of 2025, eighteen states and Washington D.C. have fully or partially deregulated their energy markets. Some allow residents to choose both their gas and electricity provider, while others only allow them to choose one or the other. In some states, energy choice is limited to certain customers, such as large industrial facilities. The states which grant all consumers the ability to choose their electricity supplier are:
- Connecticut
- Delaware
- Illinois
- Maine
- Maryland
- Massachusetts
- New Hampshire
- New Jersey
- New York
- Ohio
- Pennsylvania
- Rhode Island
While Texas is mostly deregulated, energy choice is still limited in Austin and San Antonio. In Virginia, Oregon, and Montana, only large consumers are allowed to choose their provider. Michigan allows energy service companies to sell to residential and commercial customers, but legal restrictions prevent them from supplying more than ten percent of the state’s electricity.
California was one of the first states to deregulate, but after the 2000 Energy Crisis, its government reversed course. Today, most consumers purchase electricity from their local power company, while alternate utility sales are capped and open to only a small segment of the community.
Benefits of Alternate Energy Suppliers
Purchasing electricity through a third-party provider offers several advantages, including a wide range of incentives to enhance your experience, such as:
- Fixed Rate Plans. Third-party providers purchase electricity wholesale from several different producers. These long-term deals allow them to power your home or business at the same price for several months at a time, even if prices spike.
- Improved Customer Service. Because alternate energy providers compete on the open market, they’re generally more responsive to the needs of their customers.
- Energy Services. In order to attract and retain customers, retail energy suppliers may offer additional services to help you shrink your carbon footprint and reduce lifetime energy costs.
Keep in mind that switching to a third-party provider doesn’t exempt you from delivery fees – money paid to your local utility in order to maintain the electrical grid. Some utilities charge a fixed amount while others base it on the number of kilowatts you consume every month.
Save on Energy Related Repairs with Agway
Powering your home or business not only requires a reliable supply of electricity, but strong interior wiring. Physical, chemical, and environmental stress weakens wire structures over time. Home insurance doesn’t pay for this type of damage, but we do. Agway’s EnergyGuard® Repair Program protects your heating, cooling, and electrical systems from problems caused by wear and tear.
When the need for repair occurs, our customers don’t have to waste time searching for a qualified repairman. They call us instead. Agway maintains a network of electricians and contractors, allowing us to react quickly to any problem. Once we receive your message, we send the first available technician straight to your door. There are no service fees or deductibles either. We pay for the visit and all covered parts. Don’t let a breakdown upset your budget. Sign up and start enjoying the benefits of EnergyGuard® today!
