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Texas does electricity differently from most of the country. In most of the state, you choose who sells you power. Here’s a beginner’s guide to the Texas deregulated electricity market: who does what, how prices work, and how to use your choice to save.
Key takeaways
- Texas passed electricity deregulation in 1999, and retail competition began in 2002.
- Power plants, utilities and retail providers are separate businesses.
- You choose a retail provider. Your utility (TDU) is set by your address.
- ERCOT runs the grid and the PUCT regulates the market.
What does deregulation mean?
In 1999, the Texas Legislature passed Senate Bill 7, which split the old electric monopolies into separate businesses. Retail competition opened in 2002. Today, in competitive areas:
- Generation companies own power plants and sell electricity into the wholesale market.
- Transmission and distribution utilities (TDUs) own the poles and wires and deliver power to homes. See the TDUs by region.
- Retail electric providers (REPs) buy power, design plans and sell them to you.
Who keeps it all running?
- ERCOT (the Electric Reliability Council of Texas) operates the grid for most of the state and balances supply and demand. Here’s what its alerts mean.
- The PUCT (Public Utility Commission of Texas) regulates providers and utilities and sets consumer protection rules, like the required Electricity Facts Label.
Which areas are deregulated?
Most of Texas’s population lives in competitive areas, including Houston, Dallas-Fort Worth, Corpus Christi, the Rio Grande Valley, Abilene, Midland-Odessa and Lubbock. Some areas are not open to choice, including Austin, San Antonio and El Paso, plus areas served by many electric co-ops.
How it benefits you
- More choices: dozens of providers and hundreds of plans
- Competitive pricing: providers compete for your business
- Plan flexibility: fixed, variable, indexed, renewable, free nights and more
The catch
Choice cuts both ways. With so many plans, it’s easy to pick one that looks cheap but isn’t. Bill credits, base charges and contract terms can make a big difference. Here are the red flags to watch for.
How Watt Panda helps
We help you use the market without the homework. Send us your bill and we’ll compare plans from our provider network using your real usage, then handle the switch. It’s free to you.
Helpful official resources: Public Utility Commission of Texas · ERCOT
Stop overpaying. Send us one bill.
We read the fine print, compare plans from our network of Texas electricity providers, handle the switch, and keep an eye on your renewal date. It’s free to you.
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Frequently asked questions
When did Texas deregulate electricity?
The law passed in 1999 (Senate Bill 7), and residential customers in competitive areas could start choosing providers in 2002.
Is all of Texas deregulated?
No. Cities with municipal utilities, like Austin and San Antonio, most electric co-op areas, El Paso and some other regions are not open to retail choice.
Who do I pay in a deregulated market?
You pay your retail provider, and your bill includes your utility’s delivery charges, which the provider passes through.