Deregulation has already taken place in many states in North America. The deregulation of energy divided the utility company monopolies by separating the production of energy from its distribution. When the separation occurred, it created more competition. Prior to this deregulation, electricity was provided by local utilities or regional monopolies that controlled both the generation of the power and the distribution channels for delivery.

Deregulation has allowed energy suppliers to enter the market. Consumers are not forced to receive the supply from the utility, so it gives consumers the freedom to choose their retail electric provider (REP).