A retail electricity market is the system through which power reaches homes and businesses: either through a single monopoly utility that sets the price, or through competing retail suppliers customers can choose between. For a commercial buyer, knowing which kind of market you’re in, and who the players are within it, is the first step to buying power on competitive terms rather than accepting a default rate.
What Is A Retail Electricity Market?
A retail electric market consists of utility companies, local power lines, retail energy suppliers, retail energy brokers, energy consultants, energy traders, and ultimately energy consumers. These market participants make up the majority of retail power markets in the U.S.
In regulated states, utility companies are in total control of the retail electric market and dictate certain energy rate tariffs and consumer electricity rates.
In deregulated energy states, retail markets are open to supplier competition. In these markets, energy consumers have the option to purchase electricity from a third-party provider, enroll in demand response programs, and even sell electricity back to the grid.
Retail electricity markets can vary significantly from one location to the next, and even within a state or province. In some places, retail competition is limited to only certain segments of the market, such as large commercial and industrial customers. Elsewhere, retail competition is open to all end-use consumers. In retail markets, there are energy suppliers who purchase and resell energy and energy brokers who advise customers and help them shop supplier rates. Here is a complete list of all deregulated markets.
Who Participates in the Retail Electricity Market?
Four participants make up this market:
- Transmission and distribution utilities (TDU) own the poles, wires, and meters, delivering electricity regardless of supplier.
- Retail energy suppliers (REP) buy electricity wholesale and sell it to consumers under a supply contract.
- Energy brokers shop rates across REPs on the consumer’s behalf and are paid by the winning supplier for securing them a contract, not by the customer.
- Consumers are the end user paying for both delivery and supply.
For a business, the broker is the one participant built to represent you over a supplier’s or a utility’s interests.
Regulated vs. Deregulated Retail Markets
A regulated market has one TDU controlling generation, delivery, and price, with no customer choice. A deregulated market keeps the TDU as the delivery owner, but lets the customer choose their supplier from competing REPs.
As of 2026, roughly 18 states plus D.C. offer electricity choice: about 13 offer it to all customer classes, while a handful, including Michigan, California, Oregon, and Nevada, limit it to commercial and industrial customers. See the full list of deregulated states for where your business falls.
What Are The Benefits?
The benefits of retail electric choice are well documented. A 2016 study by the free-market think tank The Heartland Institute found that when given a choice, consumers saved an average of 12% on their electric bills. And research conducted by Navigant Consulting in 2017 found that states with retail choice saw $11 billion in savings between 2009 and 2015 thanks to lower wholesale power prices.
Let’s explore the benefits for different market participants in more detail.
Retail Choice Benefits For Consumers
Energy consumers benefit the most from energy choice in retail power markets. Prior to energy deregulation, consumers only had one option – the local utility company. And, while rates were regulated, they were not given the flexibility to control energy expenses.
Some of the major benefits of retail choice for consumers include:
- The ability to fix electricity rates when prices are low
- The option to float certain price components on the energy index market
- The ability to participate in demand response
- The option to match hybrid energy supply products to energy efficiency strategies
Benefits For Energy Companies
Retail energy market expansion benefitted energy companies the most. Since the onset of energy deregulation in the U.S. many new retail electricity suppliers have taken advantage of the emerging markets. Some of the top retail energy suppliers in the nation are generating billions of dollars per year in revenue selling power in retail markets.
In addition, other companies, such as solar developers and distributed energy resource suppliers benefit from open market access. Because of the retail market structure, these companies are easily able to interface with utilities and provide services to end users.
Why Aren’t All States Deregulated?
The main reason for this lack of retail choice is the political influence of incumbent utilities. These utilities often enjoy a monopoly or duopoly in their service areas, and they don’t want to see that change. They use their lobbying power and financial resources to try to block or delay retail choice initiatives at the state level.
But as more and more people demand access to retail choice, it’s becoming harder for utilities to hold on to their monopolies. In 2010, Pennsylvania became the latest state to enact legislation that will open retail electricity markets to retail competition.
How Retail Choice Benefits Businesses
Retail choice gives a commercial buyer real advantages over a fixed utility default. With the ability to pick between REPS, you can:
- Lock in a contract when prices are favorable,
- Choose a structure (fixed, index, or hybrid) that fits your risk tolerance and load profile,
- Select renewable supply where available,
- And in many territories, enroll in demand response programs that pay for cutting usage during peak grid events.
Businesses that compare multiple suppliers, alone, through a broker, or by aggregating with other buyers, also tend to see meaningfully lower costs than those defaulting to the utility rate.
How Businesses Buy Power in a Retail Market
Buying in a retail market starts with your load profile, ie how much electricity you use and when, since that shapes which suppliers and structures fit your account.
From there it’s all about comparison. Businesses gather quotes from multiple REPs rather than one, and compare them on term, structure, and exit expectations, not just price per kilowatt-hour. Most businesses handle this through an energy broker, who runs that comparison across suppliers, negotiates terms, and stays on the account through renewal.
Need Help Exploring The Retail Electricity Market?
Our team of energy industry professionals has over 100 years of combined retail energy market experience. We understand the market participants, how the markets work in different parts of the country, and how to take advantage of retail energy for your business. Contact us today to learn more.
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