Deregulation of the energy markets is defined as the removal or simplification of government rules and regulations that constrain the operation of market forces. Deregulation of natural gas and electric in some states occurred when the Federal Energy Regulation Commission (FERC) ruled that it should limit its authority to wholesale transactions. This decision made it possible the way for individual states to determine if and how they should allow retail price competition.
Deregulation does not mean elimination of laws against fraud, but eliminates or reduces government control of how business is done, thereby moving toward a free market.
In states with deregulated retail markets, individual consumers may have the ability to choose their provider in certain circumstances.
Some states have deregulated the electricity market under their control. Here is a list of those states as of August, 2012.