Deregulated vs. Regulated Energy Markets
If you own or manage hotels in multiple states, you’ve likely noticed that your energy procurement experience is very different depending on location. In some states, you receive one bill from one utility with one set of rates. In others, you can choose from dozens of competing energy suppliers, each offering different prices and contract structures. That difference comes down to whether your state has deregulated its energy market — and understanding it can be worth thousands of dollars per year.
What Is Energy Deregulation?
In a regulated market, a single utility owns the generation, transmission, and distribution infrastructure and sets prices approved by a state regulator. You pay what they charge, full stop. In a deregulated market, the utility still maintains the wires and handles delivery, but the generation and supply of electricity (and often natural gas) is open to competition. You can shop for a retail energy supplier who agrees to provide power at a negotiated rate.
| ⚡ Energy Now Tip: Deregulated states include Texas, Pennsylvania, New Jersey, Illinois, Ohio, Maryland, New York, Connecticut, Massachusetts, and others. If your hotel is in one of these states and you’ve never shopped for a supplier, you may be paying the utility’s default ‘price to compare’ — often not the best available rate. |
Fixed vs. Variable Rates in Deregulated Markets
When shopping for a retail energy supplier, you’ll encounter two primary contract structures. Fixed-rate contracts lock in a price per kilowatt-hour for a defined term (typically 12–36 months), providing budget certainty but no benefit if market prices fall. Variable-rate contracts float with the wholesale market, meaning you can capture savings when prices are low but face exposure when they spike.
What to Watch for in Supplier Contracts
Not all retail energy contracts are created equal. Key terms to scrutinize include: early termination fees (can be substantial), pass-through vs. fixed capacity and transmission charges, automatic renewal clauses that lock you into unfavorable rates, and exclusions for market disruptions that let suppliers charge above-contracted rates.
| ⚡ Energy Now Tip: Always request a full supply agreement before signing, not just a rate quote. Energy Now reviews supplier contracts on behalf of hotel clients to surface hidden costs before they become problems. |
Regulated Markets: Making the Best of a Fixed System
In regulated states, your options are more limited — but not zero. Demand response programs, time-of-use rate structures, utility rebate programs for efficiency upgrades, and on-site generation (solar, CHP) all represent ways to reduce costs even when you can’t shop for a supplier.
Multi-Property Strategy
Hotel chains with properties in both regulated and deregulated states benefit from a bifurcated strategy: aggressive supplier shopping and load aggregation in deregulated markets, paired with utility program optimization and on-site generation in regulated ones. Managing both simultaneously requires market expertise and ongoing monitoring.
Whether your properties are in deregulated Texas or regulated Florida, there are always moves to make. Energy Now specializes in building market-appropriate strategies for hotel portfolios of every size — from single-property independents to regional chains.
Discover how strategic energy management can support your bottom line — connect with us today for a consultation.
