Deregulation in Texas
Electricity deregulation became law in the state of Texas on January 1, 2002.
Deregulation gives most Texans the right to choose their retail electric provider (REP). That right applies to residents who are served by a company that’s not owned by a municipality or a utility cooperative.
Prior to deregulation, no one had a choice about who provided their electricity as there was only one utility for each service area. With deregulation, the old utility monopoly was broken into three different companies: generation, transmission and distribution, and retail functions.
The transmission and distribution companies across the state are still regulated today, just as they have always been. These companies are responsible for installing all the transmission and distribution lines that carry power from the power plants to all of the homes and offices needing service. Their employees are also the people who read your meter, either remotely via a smart meter or at your residence.
Since power generation has been deregulated, private companies can determine where and when it’s economically advantageous to install new generating plants. They can also choose the fuel source for such generation.
Texas has become the national leader in installed wind capacity, and is quickly growing its solar capacity as well. Coupled with cleaner burning and plentiful Texas natural gas, generating capacity has kept pace with our state’s growth.
Retail functions have probably seen the most change with deregulation. New retailers have brought innovative products to the market that never existed in the old monopoly days. Prepay products, free nights and weekend’s promotions, affinity opportunities, and various contracting options have provided Texas consumers with myriad choices and all at competitive rates.
And choice has proven very popular. Since deregulation took effect in 2002, about 40% of Texas residents have switched electricity providers at least once, while more than 85% of commercial and industrial users have switched.
Unfortunately choice can be confusing. Knowing whether a variable or fixed price plan would best serve your needs means having to educate yourself about your needs and how you use electricity.
If you are willing to do that you can save money. Those who don’t stand to leave money on the table. Texans spend $24 billion on energy each year. That’s more than residents of any other state in the union. One reason is the sheer size of the population; another is the high temperatures which cause high usage.
But one thing’s for sure: Texans value their freedom to choose, and in deregulated areas of the state, residents can choose the electricity provider and the plan that work best for them.
Have questions? Call 844-501-SNAP. (We love talkin’ about electricity.)