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What You Need to Know About Texas Energy Deregulation

5 minutes
A photograph of powerlines at sunset, framed by clouds

The great state of Texas leads America in energy production. One-fifth of U.S. energy is made right here in the Lone Star state. Widely known for its vast fields of crude oil and natural gas, Texas is also a huge player in green energy technology and production.

Whether you live in Dallas or San Antonio, there’s a lot involved with an energy infrastructure as large as Texas has. At Price to Compare, we believe that just because everything is bigger in Texas, your energy bill doesn’t have to be.

How Retail Energy Providers Began in Texas

When Congress passed the Federal Power Act of 1935, Texas remained outside federal regulation by agreeing not to widen their power grid across state lines. Texas utility companies instead operated the Texas Interconnected System until it transformed into the Electric Reliability Council of Texas (ERCOT) to manage the flow of Texas’ power infrastructure.

Back in 1975, the Texas Legislature enacted the Public Utility Regulatory Act (PURA) with the goal of providing improved ability for Texas to regulate some features of rates and services from electric utilities. However, cities maintained control of their electrical rates. At the same time, electric utilities found advantages in integrating the electric production and distribution process, creating monopolies on the energy market.

Along with PURA, the public utility commission of Texas (PUC) was designed to implement “statewide regulation of the rates and services of electric and telecommunication utilities.” PUC operates to “protect customers, foster competition, and promote high quality infrastructure.” Basically, they regulate Texas utilities, integrate new legislation and provide customer assistance.

Later in 1995, Texas State Congress passed Senate Bill 373, which required ERCOT to develop a competitive market within the retail energy industry. ERCOT still helps manage regulations for Texas utilities and the distribution of electricity to Texans across the electric power grid.

Texas energy deregulation came of age with the approval of Texas Senate Bill 7 on January 1st, 2002, the residents and businesses of Texas gained the power to choose their own power. Since then, almost 40% of homeowners and residential consumers use a Retail Energy Provider (REP) to power their homes and get the lowest available energy rates.

With this shift, PUC also changed from regulating rates and services for electric and telecommunications utilities to overseeing competitive markets and compliance enforcement of statutes and rules. PUC remains concerned with protecting consumers benefits in a competitive energy market.

Texas Energy Deregulation: Making Energy Costs Competitive

All of these adjustments to the Texas Energy industry culminated into the division of the electricity process into three distinct entities.

  1. Retail Electric Providers: Customers purchase electric energy from an REP, who must be registered with the Texas PUC. Also called energy providers, they’re responsible for purchasing and storing electricity before selling it to you. REPs sell energy they have either purchased or produced at competitive rates to consumers.
  2. Distribution and Transmission: The delivery of energy through the maintenance of power lines and poles is done by your utility company and is still regulated. Your utility company is dictated by what area your home or business resides in.
  3. Power Generation: Power generation companies are registered with the PUC, as well, and do just that: generate energy. Technology allows power to be generated from a number of different sources. Renewable energy sources, like wind, solar, nuclear, geothermal and hydro. Underground sources like fossil fuels, coal, and natural gas.

With a wide marketplace of energy suppliers that service homes and businesses, taking the time and energy to compare electricity rates in Texas can be overwhelming. Instead, you can get all your information in one convenient place with Price To Compare.

We’re ready to get you the most affordable home electric bill. Find a better rate today.

We also help businesses lower their bottom line with affordable business and commercial energy rates. Get a free quote.

Comparing Energy Sources

• Green Energy Plans: The sun shines on Texas. The wind blows with gusto across the 800 miles east to west. These abundant and reliable energy sources are no longer the future of the energy industry. The future is now.

Texas produces more wind power than any other U.S. State and is only 5th in solar production. Buying locally-made green energy helps the Texas economy, creates new jobs for Texans and keeps the Lone Star State clean and beautiful.

Pro Tip:

Price To Compare can set you up with competitive renewable energy plans so you can power your home, protect the environment, and contribute to eco-friendly electric initiatives all at once.

From Austin to El Paso, every REP in Texas sources a portion of its power from green energy. You can review your energy plan to determine how much of your energy comes from renewables. On your energy bill, you’ll find details about your rate, service, and source.

Reading your Electricity Fact Label (EFL)  is a little like checking a food label to understand more about the product you purchased. Review all aspects of the EFL before signing up, with special attention to price per kilowatt-hour, early termination fees, % renewable energy sourcing, and other unexpected charges.

Still have questions? Read the Public Utility Commission of Texas Electricity Fact Label Guide.

Comparing Energy Plans

When it comes to comparing electric prices, the choice is yours and Price to Compare is here to make it simple. Use our energy comparison tool to find your lowest available residential energy rate. To help you make an informed decision, here is some insightful information on Texas energy deregulation and its various energy plans.

• Fixed Rate Plans: Fixed electric rates are locked in through a contract, keeping your rate consistent regardless of the current electric rate. While wholesale Texas electricity costs vary, these plans help keep your budget predictable and affordable, giving you the energy security you need.

Contracts vary in length. If you currently have a fixed rate plan, check when your contract is up. Start shopping for a new plan before the end of your contract. This way you don’t go a day without power or the best deal on energy.

For most consumers, Price to Compare recommends choosing a fixed-rate plan to avoid any unexpected changes in price during your plan period.

• Variable-Rate Plans: The current state of the energy market fluctuates minute to minute and variable-rate plans reflect these shifts on your energy bill statement. At peak times for energy demand or when production is low, your bill will be high.

On the flip side, you get a cheaper energy rate when power is abundant or demand is low. In certain cases, consumers’ energy needs may profit from this more flexible plan. But, buyer beware, no one likes to be surprised with an unpredictable energy bill. Variable-rate plans offer the benefit of no contract with the downside of being more financially risky.

• Pre-Paid Plans: With this arrangement, the customer pays in advance and uses a smart meter to track energy usage as it happens. Then, the REP adjusts the account balance. When the assets run low, the consumer adds additional funds to an online account. No contract is required.

Pro Tip:

We can help you avoid nasty cancellation fees, rate hikes, minimum usage fees, peak energy use times, basically being overcharged for the cost of doing business. We consider all of these factors and more to help you find  the best commercial energy rate in the state.

Wondering Which Plan is a Perfect Match For You?

Price to Compare has worked in the energy industry for over a decade and has an extensive national network of REPs. Read our tips on choosing the right energy plan for your home or business. Keeping the lights on should be simple.

Let Price to Compare eliminate the complications of Texas energy deregulation and get you your best energy rate available. If you’re not sure where to start, contact one of our experienced Energy Consultants today!