Table of Contents:
- What Services Qualify as Utilities?
- Average Cost of Public Utilities
- How to Save Money on Public Utilities
- How to Get Low-Income Public Utility Assistance
- How to Set Up Utilities When Moving
- What Are Deregulated Utilities?
- Pros and Cons of Public Utility Deregulation
- History of Public Utilities in America
- Additional Public Utility Resources
- Methodology and Data
- Frequently Asked Questions About Utilities
Facts, Figures, and History of Public Utilities
Did you wash your hands today? Cook a meal? Turn on a light in your home? Talk on the phone? If so, you used a public utility.
A public utility is an essential good or service delivered by the government or a private company. Water, electricity, and natural gas services are just a few examples that most of us utilize (no pun intended) as part of our everyday routine:
- The average American family uses 300 gallons of water per day, with 70 percent of it going to indoor use (e.g., toilet, shower, faucet, or clothes washer).
- Each year, American homes consume an estimated 11,000 kWh (kilowatt-hours) of electricity to air-condition and heat their homes, refrigerate their foods, and keep the lights on.
- Half of American households use natural gas to fuel stoves, ovens, space heaters, water heaters, clothes dryers, and other appliances, totaling 30.5 trillion cubic feet in 2020.
Utilities look a lot different today than they did just a few decades ago. While landline telephone use has become less common, mobile devices and the internet have transformed how we keep in touch. Simply put: whether it's electricity, water, gas, telephone, or internet service, the definition of a public utility is constantly evolving.
That's why we're here. In this guide to public utilities, we'll help you understand everything you need to know, such as the cost of utilities, how deregulation affects them, how to save on your utility bills, and the lowdown on low-income utility assistance.
Want to find all the utilities available in your area? Drop your ZIP code in our search bar above.
What Services Qualify as Utilities?
Electricity, natural gas, water, sewer, telephone, and internet services all qualify as public utilities because they’re necessary for everyday modern life. Just imagine trying to get through your day without electricity to power your home, natural gas to cook your food, water that's safe to drink, phone service to keep in touch with loved ones, and, of course, internet access to read articles like this one. Hard to fathom, right?
Here’s a little more about each:
- Electricity: We’ve come a long way since Thomas Edison invented the lightbulb. There are approximately 3,000 electric utilities across the U.S., with two-thirds publicly owned and the rest either investor-owned or cooperatives.
- Natural gas: Unless you live in a fully electric household, you probably can't cook your food or clean your clothes without natural gas. Natural gas makes up more than a third of total U.S. energy consumption, according to the U.S. Energy Information Administration (EIA).
- Water: Earth may mostly be covered in it, but only about one percent is available for human use. As the climate changes and droughts increase, this resource is more precious than ever.
- Waste management and sewer: When we take out the trash or flush the toilet, it doesn’t just magically disappear. The town or city you live in usually provides these services, unless you live in a remote area or a home that relies on a septic system.
- Telephone: This doesn't just refer to your landline any longer. In fact, the majority of U.S. households are cellular-only now, though 39 percent still have both cellphones and landlines.
- Internet: It’s still controversial to call the internet a public utility because, unlike the other services, it’s not fully regulated by the government. However, it’s essential for 21st-century life, and there are significant federal and state efforts to bridge the “digital divide,” making access available to everyone.
Average Cost of Public Utilities
For most public utilities, your monthly costs will differ drastically based on your state, the size of your home, and your personal usage. And let’s not forget the local weather: Southern states like North Carolina and Florida have higher energy bills during the summer for air conditioning, while Northeastern states have higher natural gas bills in winter for heating.
That said, the average U.S. household pays:
- $117 per month for electricity
- $66 per month for natural gas
- $47 per month for water
- $115 per month for cellular phone service
- $64 per month for internet
Let’s break those amounts down a little further.
Electricity Bill Cost
Refrigerators, clothes washers and dryers, and televisions are heavy-duty energy users. And during the hotter months, the biggest culprit making your monthly bill rise is air conditioning, which accounts for 12 percent of home energy costs annually. The size of your home, where you live, the number of people you live with, and whether you’re a deregulated utility customer all influence your monthly energy costs. (We'll dig into the pros and cons of deregulated energy later.)
Using the Electricity Cost Map: Hover over specific states to see electricity cost stats, including the average monthly electricity bill, average monthly electricity bill rank, average monthly electricity consumption (kWh), and cost per 100 kWh.
Cheapest and Most Expensive States for Electricity
Top 10 Cheapest Electricity States
Average monthly bill
Top 10 Most Expensive Electricity States
Average monthly bill
Residential costs for electricity are vastly different across the country. Here are some key insights to explain why:
- Residents in Utah and other Mountain States (New Mexico, Colorado, Montana, Wyoming, and Idaho) pay lower electricity costs due to the area's abundance of natural resources. Utah's diverse sources of energy (fossil fuels, hydroelectric, coal, and renewables) help keep electricity rates low.
- Electricity is the most expensive in Hawaii at $168.13 per month on average. The island state uses 11 times more energy than it produces and relies heavily on imported fossil fuels, driving up prices astronomically.
- Monthly electricity costs in Southern states like Mississippi, South Carolina, and Alabama are on the high side due to the region's climate. Demand to keep households cool during summer and warm during winter is the main culprit behind the pricier bills in this area.
- Consumers in Connecticut pay a pretty penny for electricity, with an average monthly cost of $153.46. Whether electricity originates from natural gas, hydroelectric, or nuclear power, the lack of pipeline infrastructure in the state results in higher energy prices.
Natural Gas Bill Cost
Natural gas is an affordable and popular energy source used for home cooking and heating. Like electricity, the size of your home, where you live, the number of people in your household, and whether you rely on a deregulated energy utility has a dramatic effect on your overall monthly natural gas cost. Your monthly natural gas use will appear on your bill along with taxes and fees as dictated by your state's public utilities commission (PUC).
Using the Natural Gas Cost Map: Hover over specific states to see natural gas cost stats, including the average monthly gas bill, average monthly gas bill rank, average monthly gas consumption (mcf), and cost per mcf.
Cheapest and Most Expensive States for Natural Gas
Top 10 Cheapest Natural Gas States
Average Monthly Bill
Top 10 Most Expensive Natural Gas States
Average Monthly Bill
When talking about energy utilities, it all comes down to location, location, location. Why are residential costs for natural gas so different in certain states? Here are some key insights behind the varied price of natural gas across the country:
- Arizona spends the least on natural gas out of any state because it’s hot year-round, reducing the need for indoor heating. Florida, Louisiana, New Mexico, and Nevada are also warm states in the Top 10 for cheapest natural gas due to their scorching temperatures.
- Meanwhile, Alaska spends the most on natural gas of any state because, well ... it’s Alaska. Connecticut, Maine, New York, and Ohio are just a few other Northeastern states with harsh winters and high average monthly bills in our Top 10 list for most expensive states for natural gas.
- Temperature isn’t the only factor, though. Georgia is a hot state, but it must import its natural gas, which raises prices exponentially. Meanwhile, Colorado is a cold state but it produces a large amount of natural gas, making it the 8th cheapest state for natural gas.
- Some states don’t really need natural gas, even if it is cold. Idaho, which ranks as the 5th cheapest state for natural gas, gets quite cold in the winters. However, they get most of their energy generation from massive hydroelectric facilities, lessening the need for natural gas to warm their homes over electricity.
Water Bill Cost
Flushing toilets, bathing, washing clothes and dishes, preparing food, and drinking from the tap all encompass indoor residential water use. Outdoor residential consumption includes watering lawns, landscaping, gardening, and pool maintenance. We often don’t realize how much water we’re using, which totals nearly 90 gallons per day for the average American.
That said, water usage depends heavily on climate; people in drier states require more of it. Your monthly bill may also include fees to help maintain local water infrastructure and pay the workers who keep it flowing. These costs can add up pretty quickly. If you live in an apartment building, though, your management company may cover all water expenses.
Using the Water Map: Hover over specific states to see water cost stats, including the average monthly water bill, average monthly water bill rank, average monthly water consumption for single-family homes (gallons), and average cost per 1,000 gallons.
Cheapest and Most Expensive States for Water
Top 10 Cheapest Water States
Average Monthly Bill
Top 10 Most Expensive Water States
Average Monthly Bill
When it comes down to it, we all need water to survive. Yet, the cost of it varies depending on where you live. Here are some key insights explaining the differences in monthly residential costs for water across the U.S.:
- New York's water is the cheapest at $21.93 per month on average — and, according to many, the best. A major factor in that price is the state's water conservation rate structure. The more water consumers use, the higher their bills become. The goal of the four-year plan (which went into effect in 2017) was to reduce peak summertime water usage by 15 percent and help customers reduce their water consumption, and bill costs, in the process. And it seems to be working.
- Alaska is flush with water, making the utility relatively inexpensive ... in theory. However, in Anchorage (Alaska's largest city), many consumers pay a flat rate for the service, whether they use a lot of water or a little. It turns out, maintenance of the state's water infrastructure is expensive, and each month, customers pay toward those improvements.
- Nevada is a desert, and water isn't a rich resource. But this dry state has kept monthly bills down at $31.35 per month on average with water restrictions and a tiered billing structure. While consumption rises in the hotter months — irrigation and landscaping play a big part here — Nevada has succeeded in curbing wasteful water use, keeping monthly costs low.
- West Virginia has the most complex water system in the U.S., with hundreds of pressure gradients put in place to help pump the water up and down hilly landscapes. It's expensive to transport water this way, making location the main reason West Virginia's residential water costs are higher than in the rest of the country, at an average of $93.10 per month.
Internet Bill Cost
Calling the internet a public utility is a relatively recent phenomenon. How we digitally communicate with each other continues to evolve, and one constant amid it all — from email to texting to FaceTime — is reliable internet access. Simply put, the internet has cemented itself as an essential service in all of our lives.
Similar to the energy utilities listed above, your location and household's income status can influence the type of service available to you. Internet providers, like AT&T and Verizon, offer different plans and connection types to serve consumer needs.
Average Cost of Internet per Connection Type
Average monthly price
Average download speeds up to
Average internet value per Mbps
There are many internet plans on the market today, which can become a little overwhelming when shopping around for the best access to fit your needs. Many times, you’ll find the internet connection type dictates the cost you’ll be paying.
- DSL, also known as Digital Subscriber Line, is the cheapest internet connection type at $46.28 per month on average. Running through the preexisting telephone line infrastructure, it’s the oldest form of internet and usually the slowest, with download speeds around 50 Mbps. While your monthly bill will be low, so will your speeds.
- If you want the fastest speeds around and are willing to pay a little extra, fiber internet has a reasonable average monthly cost of $71.63. Gigabit speeds are not uncommon with fiber, and in terms of value, fiber offers the most bang for your buck at only $0.10 per Mbps. Unfortunately, it’s not available everywhere.
- Similar to fiber, cable internet can achieve lightning-fast speeds, but not all cable plans are created equal, and some are middle-of-the-road in terms of download speed. Still, cable internet is a good value for most people, with an average monthly price of $64.28, and it’s widely available across 90 percent of the U.S.
- It’s not always about the average monthly price, though. Unlike water, electricity, and gas (which is available almost everywhere), there are still underserved parts of the U.S. where high-speed internet isn’t common. If you live in one of these areas, you may find yourself paying up to $92.49 per month on average for satellite internet. That said, fixed wireless and 5G home internet alternatives from companies like Verizon and T-Mobile are bringing the prices down and speeds up in these areas.
Landline Phone Bill Cost
When referring to telephone costs per state, it's necessary to acknowledge the evolution in how we use phones at home. The use of landline telephones in the household continues to decline. In 2020, nearly 63 percent of American adults (about 157 million) and nearly 74 percent of children (approximately 54 million) didn’t live in a household with a landline telephone. Many of these individuals relied primarily on a mobile device or the internet to communicate with friends, family, and coworkers.
Dialing It In: Until the early 1980s, many consumers had to pay monthly rental fees to use landline telephone equipment in their homes. Today, many internet companies charge a similar fee to lease modems.
Considering that more and more people rely on mobile phones for communication, their phone bills largely depend on the plans they sign up for through their mobile providers — AT&T, Verizon, T-Mobile, and the like — and those prices can get locked in with long-term contracts. That said, you can still get a landline telephone with caller ID and unlimited calling installed in your home for around $25 per month on average from companies like CenturyLink, Spectrum, and Xfinity.
How to Save Money on Public Utilities
There are many ways to save money each month on your electricity, gas, and water bills. With a few tweaks and small changes, you can keep those precious dollars in your pocket. Here are some saving tips for each of your main utility bills:
- Buy energy-efficient appliances. Look for the Energy Star label, which can save you $40 per month washing clothes, $16 per month drying them, and $11 per month on air conditioning.
- Use energy-efficient light bulbs. These types of light bulbs can cut $45 per year off your electricity bills, according to the Department of Energy (DOE).
- Instead of turning on your air conditioner, use fans. Fans are better for the planet, and you’ll pay up to 14 times less to stay cool.
- Unplug appliances when not in use. We know this suggestion is a pain, but it could save you $100 to $200 annually just for pulling the plug.
Natural Gas Bill
- Adjust your thermostat throughout the day. By turning your thermostat back 7 to 10 degrees from its normal setting, for eight hours a day, you can save up to 10 percent a year on heating and cooling.
- Caulk seals and install weatherstripping around windows and doors. You can save 5 to 10 percent on your energy bills by properly sealing your windows and doors to protect them from pesky leaks. Caulking small gaps found near lighting fixtures, wall outlets, floor tiles, and the like is a little step that goes a long way toward savings.
- Fix leaky ductwork for your heating, air conditioning, and ventilation. Improving your home's ductwork will improve the efficiency of your heating and cooling systems and lower your energy cost by up to 20 percent.
- Adjust your water heater. Lowering the temperature settings on your home's water heater can save you 4 to 22 percent annually.
- Use your dishwasher instead of handwashing dishes. Using an Energy Star dishwasher will save an estimated 161 gallons of water per year and knock a couple of bucks off your monthly bill.
- Install water-saving showerheads and faucets. Look for the WaterSense label on your showerheads and faucets. The average family can save more than 2,700 gallons of water per year when replacing showerheads. Switching out old faucets and aerators can save $250 in water and energy costs over the faucet's lifetime.
- Install a low-flow toilet. The average family can save $130 yearly — and 13,000 gallons of water — by replacing inefficient toilets in the home.
How to Get Low-Income Public Utility Assistance
Public utilities should be accessible to everybody who’s, well, part of the public. Fortunately, low-income assistance programs and plans can help heat your home in the winter, cool it off in the summer, and keep the lights on all year round.
Families are considered low-income if their household income is less than twice the federal poverty threshold. The following table outlines the poverty guidelines for 2021:
Federal Poverty Guidelines for 2021
Persons in family/household
Poverty income guideline
* For families/households with more than 8 people, add $4,540 for each additional person to calculate the poverty income guideline. *
Here are just a few of the low-income assistance programs in the U.S. that can take some of the financial burden off your shoulders when it comes to paying for your utility services:
- Low Income Home Energy Assistance Program (LIHEAP)
- LIHEAP is a government benefit program that assists eligible low-income households with energy utility costs, bill payments, energy crisis assistance, home weatherization, and other energy-related home repairs. An estimated 6 million households received an average benefit of $375 in 2018, which covered half the year's heating costs.
- Weatherization Assistance
- DOE’s Weatherization Assistance Program helps low-income households reduce energy costs by improving the energy efficiency of their homes. These improvements and upgrades have helped households save an average of $283 each year.
- Salvation Army's Project SHARE
- For over two decades, the Salvation Army has partnered with utility companies in states like Georgia, Arizona, and Idaho to provide financial assistance to those in need. Most people donate by adding $1 or more to their energy utility bills each month, which adds up to huge relief in people’s lives. SHARE is not a government-funded program.
- Lifeline Program
- Lifeline is a longstanding federal program administered by the Universal Service Administrative Company (USAC) that strives to bring equitable telephone and internet access to all citizens, specifically low-income households and seniors. Eligible customers will get up to $9.25 toward their monthly bill. You can only use Lifeline for either phone or internet, but not both. To get Lifeline, find a company near you.
- Emergency Broadband Benefit
- The Emergency Broadband Benefit Program assists lower-income households with internet access and device purchases. Eligible recipients get $50 per month toward a broadband service plan (or $75 per month if they live on tribal lands) and a one-time $100 discount on the purchase of a laptop, desktop computer, or tablet if the recipient contributes $10 to $50 toward the purchase price. The benefit is only valid for one monthly service discount per household.
Public utility providers also typically offer low-income assistance options such as senior discounts and payment assistance plans. Contact your utility provider for more info.
If you're looking for help with internet and phone service, we’ve compiled a thorough directory of low-income plans available to serve you.
How to Set Up Utilities When Moving
Moving to a new address can be a huge undertaking. From packing boxes to loading furniture into a truck — never mind the refrigerator — it’s always stressful. Even if you hire movers, you’ll still have to get your utilities in order before you leave your home for good.
There's a lot to consider. Are you moving to an apartment building, or did you purchase a new home? Will your current utility company offer services at your new residence, or do you need to switch?
Here are a few steps to help you pick and switch utilities for your next move:
- Research Utility Providers in Your New Neighborhood. Three to four weeks before the move, find utility providers — water, gas, electricity, home phone, home security, cable or satellite TV, internet, and waste removal — located in your desired area. It's common for utility companies to only service certain areas (and apartment buildings can require specific companies or restrict satellite dishes), so there's a strong possibility you’ll end up switching providers entirely.
- Contact Your Current Providers. Two weeks before the move, inform them of the address change and shut-off date. If you’re sticking with the same utility provider, you can transfer service to your new home. Otherwise, you’ll need to cancel your service and contact your new provider about the process of setting up utilities.
- Have Your Information Ready. To ensure everything goes smoothly, you may need your current account number, proof of identity (a driver's license, passport, or birth certificate), proof of address (lease agreement or mortgage paperwork), your social security number — so the provider can run your credit history to see if you've consistently paid your utilities in the past — and a credit card or checking information.
The easiest way to find your new utility providers is by simply using our search by address tool. If you want to compare your cost of living between your old and new location, check out our moving comparison tool.
Special Considerations for Moving Deregulated Utilities
If you're looking to move your deregulated electric or natural gas service to a new address, the steps are slightly different. Every deregulated provider offers various contracts — from variable monthly plans to long-term plans spanning over three years.
Signing a contract can be nerve-wracking when you put pen to paper. Life is unpredictable. What happens if you need to move before your contract is up? Is it even possible to break your deregulated energy contract?
In short, yes. Each state with a deregulated energy market offers provisions for this exact scenario. Suppose you're moving to a different area within the same region your utility company operates. In that case, they will usually allow you to transfer your service to the new address without charging a penalty. If you’re moving to a region that your current utility company doesn’t cover, however, you may have to pay an early-termination fee (ETF) for canceling service before your contract is up. It depends on your state’s laws on the matter.
Fee Finder: Texas and Ohio have no penalties for ending a supply contract early, while Connecticut limits such a fee to $50.
Curious about what your state's stance on early contract termination is? We recommend checking your contract and calling your current or prospective utility provider.
Transferring Your Services Between Two Places
It's common when moving to have electricity, water, natural gas, and your internet on at your old address and the new one at the same time. Remember, moving takes time. Cleaning out your old home may require many trips. You may even need to keep the lights on in your old residence until your house sells.
Most electricity providers will let residential customers keep two homes on the same contract for up to 60 days. All that's required is a telephone call to your utility provider. Let them know you want to leave service on at your current home — and when exactly you want service turned on at your new address.
If you’d prefer to do this all online, just look for "Transfer My Service" (or a similar option) on the utility company's website. From there, you'll be able to schedule a move-in date for service at the new address and a move-out date for your old residence. And if it's taking longer than expected to sell your home, you can always contact the company to request an extension.
What Are Deregulated Utilities?
A deregulated utility is an essential energy service (electricity or natural gas) offered by private companies, not public entities. Deregulated markets took off in the 1990s, and currently, 26 U.S. states let customers choose their own providers for either natural gas or electricity — and, in a few circumstances, both.
Deregulation can bring competition, lower prices, and a wide array of plans and alternative energy options like solar power to your utility landscape. Imagine you're hungry for a cheeseburger, and you want it customized just the way you like it — but there’s only one burger joint in town, and it won’t let you make substitutions. You’d rather have tons of restaurants to choose from, right? (Now, please excuse us while we get lunch.)
So, why aren't deregulated utilities available in every state? Even though a regulated utility market offers little choice, they’ve proven to have stable prices and reliable service, giving consumers long-term certainty. In short, people don’t mind that one burger spot if it’s pretty good. We’ll explore the pros and cons of deregulation a little later.
Deregulation of Electric Companies
There are currently six states that solely offer deregulated electricity: Connecticut, Delaware, Maine, Massachusetts, New Hampshire, and Texas. (Seven other states — Illinois, Maryland, New Jersey, New York, Ohio, Pennsylvania, and Rhode Island — offer deregulated electricity along with deregulated natural gas.) A few of the major companies providing service in these markets include Ambit Energy, Constellation, and Direct Energy.
Shopping for Electricity: Most Americans who have access to a choice of electric utilities still prefer to stick with their default providers, which hasn’t changed over the past decade.
Each state’s individual policies may limit unregulated electricity to residential or commercial customers, specific geographic regions, or even certain electricity types. For example, Virginia allows residents to purchase third-party renewable energy if it’s not available from their main providers, which convinced major utilities to offer it and therefore block green competition.
Deregulation of Gas Companies
The natural gas industry dates back to the mid-1800s, and states began forming public utility commissions to regulate it in the early 1900s. From the 1930s to the 1970s, federal oversight was mostly limited to pipelines, and states’ low price controls dissuaded companies from new exploration. In response to a nationwide supply crisis, Congress passed the Natural Gas Policy Act of 1978, which bypassed local regulations and incentivized new production; pricing deregulation continued with the Natural Gas Wellhead Decontrol Act of 1989.
Natural Gas Insights: In 2020, natural gas prices hit their lowest level in a quarter-century, largely due to mild winter temperatures and reduced demand during the COVID-19 pandemic.
Today, 11 states solely offer residents a choice of natural gas providers: California, Florida, Georgia, Indiana, Kansas, Kentucky, Montana, Nebraska, New Mexico, West Virginia, and Wyoming. (As mentioned above, Illinois, Maryland, New Jersey, New York, Ohio, Pennsylvania, and Rhode Island offer both deregulated natural gas and deregulated electricity.) Companies like NRG, Xoom Energy, and TIGER are major players in supplying consumers with alternative options from their state-regulated natural gas utility.
Deregulation of Water Companies
If you're looking for deregulated water utilities, you won't find them. Water is such an important resource — everybody’s life depends on it — that the federal government enforces strict rules on every utility in this space. The Safe Drinking Water Act of 1974 “focuses on all waters actually or potentially designed for drinking use, whether from above ground or underground sources,” explains the Environmental Protection Agency.
Did You Know? Although water utilities can’t compete for customers, many Western U.S. states allow companies and farmers to lease or sell their water access rights voluntarily. This practice, called water trading, can better allocate resources to meet agricultural and residential demand, but it has been criticized over environmental and profiteering concerns.
Private water companies do exist, but they only serve 12 percent of the U.S. population and must operate under close federal and state oversight. Although industry experts have speculated about the deregulation of water utilities for decades, cost-cutting measures to stay competitive in a crowded marketplace probably aren’t in anybody’s best interest. Water remains a completely regulated utility across the U.S.
Deregulation of Internet Providers
Considering all that most households use the internet for — from conducting work meetings over Zoom to attending remote classes — it has become an essential communications tool, not just a luxury for watching Netflix.
Unlike more traditional utilities, the internet isn’t an officially regulated public utility, although it has many characteristics of one. For instance, the Federal Communications Commission (FCC) and laws such as the Digital Millennium Copyright Act (DMCA) have put safety regulations on the internet and stipulated how the public interacts with content as well as with other users.
While full regulation has not happened, the debate over regulating the internet continues today. For example, net neutrality is the concept that all internet traffic and access should receive equal treatment — meaning your internet service provider (ISP) can't charge you more to stream a television show than to check your email. Supporters argue that it promotes free expression and competition, while opponents say it hampers innovation and gives unfettered access to objectionable content.
Nothing but Net: After the FCC repealed net neutrality in 2017, California (being home to Silicon Valley) passed a law to save it.
With other controversies filling the headlines, such as whether lawmakers can or should regulate social media companies, the coming years will be important ones in this legal arena. Until then, the internet remains an open field for major cities across the United States.
Pros and Cons of Public Utility Deregulation
The upsides to deregulation are choice and competition. If a customer wants to use renewable energy for the sake of the environment, they can find a provider who offers it. Or, if they just feel their current provider has lousy customer service, they can find a more responsive one.
But there are disadvantages to deregulation as well. Low teaser rates that skyrocket later, hidden fees, and other misleading information in the contract’s fine print isn’t uncommon. In fact, in some states, people may end up paying more for deregulated utilities. Deregulated markets can also result in unreliable service due to sourcing issues, changing weather, and general market volatility.
A powerful winter storm hit Texas in early 2021 and left millions of residents without power for days; the state had received prior warnings about the vulnerability of its power grid, but with so much of its market deregulated, individual power companies didn’t coordinate to prepare for such a crisis, and the surge in demand forced them to shut generators down. (Furthermore, since Texas operates on a solitary power grid, it is disconnected from neighboring states, leaving residents unable to get outside help.)
So, deregulation allows customers to choose who provides their energy — and what kind of energy — but not every company is forthright and dependable. We put together the pros and cons of deregulation for you, so you stay in the know.
Pros and Cons of Deregulation
History of Public Utilities in America
Utilities have undergone quite an evolution since Americans first got electricity delivered to their homes a century and a half ago. But how did we get here? We took a look back at where things started and put together this useful timeline of America's public utilities system to understand better where things stand now:
- 1882: After Thomas Edison invented the light bulb in 1879, commercial electricity distribution from private companies begins.
- 1933: President Franklin D. Roosevelt creates the Tennessee Valley Authority (TVA), the first public utility company in America.
- 1935: The Public Utility Holding Company Act (PUHCA) is signed into law leading to the regulation of public utility holding companies and the end of unregulated monopolies.
- 1973: The Organization of Arab Petroleum Exporting Countries (OAPEC) proclaims an oil embargo on the United States for supporting Israel during the Arab-Israeli Yom Kippur War of 1973. Oil prices skyrocket from $3 per barrel to $12.
- 1975: The Energy Policy and Conservation Act (EPCA) is created in response to the oil crisis to increase energy production and supply by establishing a reserve of petroleum in America.
- 1977: The Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) are also created.
- 1992: The National Energy Policy Act (NEPA) is created, presenting the foundation for a competitive wholesale electricity generation market.
- 2000: California, Texas, Rhode Island, New York, Pennsylvania, and Massachusetts are partially deregulated.
- 2005: President George W. Bush signs the Energy Policy Act into law, transferring regulation duties of utilities from the Securities and Exchange Commission (SEC) to FERC.
- 2016: Energy deregulation arrives in some capacity in nearly two dozen states.
Additional Public Utility Resources
In a perfect world, you would never have to think about utilities. (Turn on the faucet, you get water; flip a switch, you get light.) But dealing with utility companies is an unavoidable part of life from time to time, so we put together several resources to help you learn more and navigate the wonderful world of utilities.
Methodology and Data
To generate the information related to average public utility costs, we utilized a variety of sources of information — and methods of calculation — to arrive at the figures found above.
- We pulled the data related to electricity cost directly from a report by the U.S. Energy Information Administration (EIA) on residential electricity consumption.
- We also utilized 2020 EIA figures pertaining to natural gas to generate the average monthly cost information. Unlike electricity, this process required taking the average monthly consumption and dividing the number of households subscribing to natural gas services in the state to get the natural gas usage per household. From there, we used average natural gas rates to arrive at the average monthly natural gas cost per household.
- We used the latest United States Geological Survey (USGS) National Water-Use Information Program report from 2015 to get the average daily water consumption in each state in gallons per capita. From there, we were able to multiply that information to arrive at the average monthly water consumption, which we represented as a single-family household by multiplying that number by four. We then collected the rate information from the main municipal water utility companies from the five most populous cities in each state and calculated the average monthly cost based on the USGS consumption numbers.
Other data, facts, and figures found throughout this piece were compiled from the following sources: Energy Star, Department of Energy (DOE), U.S. Census Bureau, Utah Geological Survey, Centers for Disease Control and Prevention (CDC), U.S. Environmental Protection Agency (EPA), National Center for Children in Poverty (NCCP), U.S. Department of Health & Human Services (HHS), Reuters, Urban Institute, The Salvation Army, and Universal Service Administrative Company.
Frequently Asked Questions About Public Utilities
What services qualify as public utilities?
A public utility is an essential good or service provided by the government or a private company. Currently, the services that qualify as utilities include water, electricity, natural gas, telephone, internet, sewer, and waste management.
How much do utilities cost?
Utility cost varies depending on what state you live in, your consumption, and many other factors. That said, here are the current average costs of public utilities based on our calculations:
- $117 per month for electricity
- $66 per month for natural gas
- $47 per month for water
- $115 per month for cellular phone service
- $64 per month for internet
What are some low-income plans and programs for utilities?
When times are tough, a little help keeping the lights on and keeping the house cool can go a long way. Here are some helpful low-income plans and programs for utilities:
- Low Income Home Energy Assistance Program (LIHEAP)
- Weatherization Assistance
- Salvation Army's Project Share
- Operation Round-Up
- Emergency Broadband Benefit
What is energy deregulation?
Energy deregulation is a collection of state laws that allow consumers to choose between energy providers. Through this process, consumers can shop for energy companies that fit their needs, encouraging free-market competition.
How many states offer deregulated utilities?
There are currently 26 states that offer deregulated utilities for consumers, primarily electricity or natural gas. Illinois, Maryland, New Jersey, New York, Ohio, Pennsylvania, and Rhode Island offer deregulated energy markets for both electricity and natural gas. While no state is completely deregulated, Texas comes close with 90 percent of its population having access to deregulated energy markets for both electricity and natural gas utilities.
Are deregulated utilities right for me?
Deregulated utilities are right for you if you are looking for a provider change and want control over who you receive your electricity and natural gas from. Shopping for deregulated utilities puts the power in your hands, giving you the ability to shop around for the product and price rate that will best meet your needs. However, be sure to read the fine print for hidden fees and misleading introductory rates. Weather events and market shocks can cause unexpected disruptions in service.
How do I choose the right utility provider?
The best method for choosing the right provider is to understand what exactly you need regarding utilities. Once you have a general idea of what you’re looking for, the next step is comparing prices between different providers. Your findings should help determine which providers would work best for your needs.
Why can’t I sign up for deregulated energy?
Energy deregulation is mandated by state law, and not every state has deregulated its utilities. The best way to find out if your state has energy deregulation is by referencing the map above and asking your current energy provider whether your zone is deregulated.
What is a public utilities commission (PUC)?
A PUC is an oversight group responsible for ensuring public utilities provide reasonably priced, adequate service to customers. Commissioners are typically appointed by a state's governor and must be confirmed by the state senate before taking office. Depending on the state, a commissioner may serve a term of four to six years.
Do I need to pay a penalty for switching utility providers?
In most cases, you won’t pay a penalty for switching providers. There may be an early termination penalty for breaking an existing contract. The best way to find out is to review your agreement details with your current energy provider.
How long does the process take to switch energy providers?
Switching energy providers should happen fairly quickly. Once you sign up with a new energy provider and sign the contract, you’ll have a 14-day "cooling off" period to change your mind. The actual switch to your new energy provider should happen within seven business days — with no disruption to your service.