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Texas Energy Deregulation

Texas Energy Deregulation

Everything you need to know about Texas energy deregulation.

Thad Warren
Thad Warren
January 2023
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3 Minutes

The electric industry has gone through many changes in the 21st century, including the decision many states have made allowing electric industries to participate in a competitive market. This process, known as deregulation, empowers consumers to find lower rates for utilities and reduces the rates of renewable energy resources. Texas is one of many states that participate in energy deregulation.

Texas Electricity Deregulation Facts

Texas is the largest deregulated sector in the U.S., and most Texas residents choose their electricity provider. Learn more about Texas electricity deregulation and how it can affect you.

1. Most, But Not All, Texans Have Electric Choice

While 85% of Texas residents live in deregulated energy markets, there are several cities and areas of Texas that do not have a deregulated retail electricity market. The largest cities in Texas that are not deregulated are Austin, San Antonio, and El Paso. 

If you are unsure if you live in an area with a deregulated market, you can use our ESIID lookup tool to find out along with lots of other useful information.

2. Most Texas Residents Have Several Different Energy Plans to Choose From

85% of Texas residents live in deregulated energy markets. The ability to select an energy plan based on your lifestyle and unique needs is one of the deregulated market's significant benefits. Many of the most popular energy plans include:

  • Fixed-rate plans: With fixed-rate plans, customers pay the same rate each month. A fixed-rate plan is not affected by market fluctuations, and these programs are excellent for customers looking for a plan with stability and security. 
  • Variable-rate plans: A variable-rate plan will change depending on market fluctuations. With a variable-rate plan, you may initially find a cheaper rate that could spike in price as the market rises. These plans don't require a contract and are ideal for customers who are looking for flexibility and are comfortable with risks. Generally, we do not recommend variable-rate plans for most people.
  • Green energy plans: Texas is a leader in green energy with wind, solar and other renewable resource options. These plans allow customers to offset their home or business' carbon emissions with green energy.  
  • Prepaid plans: When you shop for energy plans, many providers will ask for a deposit before providing service. Prepaid energy plans do not require a credit check or deposit and allow customers to pay for their energy in advance. 

3. Texas Is a Large Producer of Renewable Energy 

While Texas is most famous for its coal and oil industries, this state is also notable for its renewable energy production. In the U.S., Texas is a leading producer of wind energy and solar power. As a result, customers across Texas can choose green energy plans

Every Texas electricity plan uses a percentage of green energy. Check the Electricity Facts Label provided with your energy plan to find the specific percentage and other details about your service.

4. Energy Deregulation in Texas Has a Unique History

If you're interested in when Texas deregulated electricity, it's important to consider Texas's long and unique history with electricity production and regulation. Texas electricity regulation dates back to World War II. At that time, utility companies created the Texas Interconnected System (TIS), which provided power to factories aiding the war effort. The TIS quickly determined that a connected power supply system generated lower prices for customers and continued using the system after the war.

In the 1970s, the TIS became the Electric Reliability Council of Texas (ERCOT), which continues to oversee grid reliability and ensure no buyer or seller gains an unfair advantage. In 2002, Texas passed a law to deregulate electricity for its citizens. This decision allowed the majority of the state to choose fast, affordable and reliable energy to fit their needs. 

5. Texas Has Its Own Power Grid

Unlike other states, the State of Texas controls its own power grid. After Congress established the Federal Power Act in 1935, Texas utilities agreed not to extend their power grids outside state lines. This decision allows Texas utilities to retain their freedom and avoid regulation from the Federal Power Commission.

ERCOT is beyond the reach of federal regulation and has four primary responsibilities that drive the deregulated market in Texas. These responsibilities include:

  1. Maintaining a reliable system.
  2. Creating a competitive wholesale market.
  3. Enabling a competitive retail market.
  4. Allowing access to transmission. 

6. All Residential Customers Receive an Electricity Facts Label (EFL)

The Public Utility Commission of Texas (PUC) requires Retail Electricity Providers (REPs) to provide their customers with an Electricity Facts Label (EFL) for each of their plans. This information makes it easier to select an energy plan that fits your needs. With this label, customers can quickly find answers to their questions about how much their electricity usage costs per month and whether their plan rate is fixed or variable.

An electricity facts label also provides information such as:

  • Electricity price.
  • Special rates.
  • Length of contract.
  • Termination fees.
  • Renewable energy content.

Commercial electricity plans do not have an EFL. Business owners should read their contract thoroughly to understand the rate their getting. Luckily, EnergyBot makes it easy for businesses to find commercial energy plans that don't have variable rates or other tricky terms. 

Find the Energy Plan That Works for You With EnergyBot

A deregulated energy market allows customers to find the lowest rates. At EnergyBot, we make comparing electricity plans easy. As the only online energy marketplace that is 100% tech, our algorithm can quickly compare rates to match residential and commercial customers with the lowest energy rate available in your area. 

EnergyBot makes shopping for energy plans transparent and straightforward. To learn more about how we can help you start saving money, contact us today