Natural Gas in Deregulated States

Natural gas is a fossil fuel composed primarily of methane, used for heating, electricity generation, and as a feedstock for chemicals and fertilizers. In many U.S. states the natural gas market is deregulated, which means consumers can choose their natural gas supplier.

Deregulation began in the 1990s when the Federal Energy Regulatory Commission (FERC) issued Order No. 636, which required pipelines to separate the transportation of natural gas from its sale. That separation created a competitive marketplace where consumers could choose their supplier.

Where natural gas is deregulated

Natural gas is currently deregulated in more than 20 states, including Texas, New York, Pennsylvania, and Ohio. In these states, consumers can choose from local distribution companies, independent gas marketers, and energy service companies.

Benefits and trade-offs

The main benefit is the ability to choose a supplier with the best rates and service; competition tends to lower prices and spur innovation. The trade-offs mirror those in electricity markets, lighter oversight can allow volatility, and consumer protections vary by state.

On balance, deregulation has generally increased competition and lowered prices for natural gas consumers. The natural gas market offers a mix of benefits and drawbacks, so it’s important to stay informed and make a confident decision about your supplier, ideally with a partner who knows the market.