How does electric deregulation work in Texas?
Prior to deregulation, the electric utilities had three main functions that were integrated :
1) Electric generation – taking raw natural components such as coal, natural gas, flowing water, and others and converting their energy into electricity
2) Transmission – taking the energy produced by electric generation and injecting into the local distribution utility’s power grid
3) Distribution / delivery – delivering the energy to your home or business safely
In addition, utilities were usually tasked with load and voltage balancing, making sure that there was never too much or too little electricity produced and injected into the system, so that voltage didn’t fluctuate and there was never a blackout or power surge. The utility set prices, and there were no choices to buy the electricity commodity from anyone other than the utility.
Many claimed the market monopoly power of the utility made electricity very expensive.
Energy deregulation has allowed residents and businesses to purchase their electricity from electricity providers certified by the Texas Public Utilities Commission. There are many offers in the market made possible by Texas electricity choice. The good news is that many of these can be tailored specifically for you.
Significance of deregulation of electricity and how it works
After deregulation, your local utility provider (i.e., Oncor or Centerpoint) still provides delivery of the electricity, and provide maintenance to poles, wires, and electricity meters. Your electricity supplier will furnish the electricity that flows through the utility's system, and issue you a consolidated bill with both the utility charges and the energy charges.
Deregulation is advantageous because prices can be lower due to competitive pressures. Deregulation also allows for more product innovation, hence you can choose what is best for you.
If you become an informed consumer, you can find a plan that suits your lifestyle. As a customer, you can decide to enter into agreement that offers you any of the following:
- A low price for electricity
- A stable long term price
- Energy from renewables
- A rebate
- A partner program rewarding you with miles or points
- Energy savings devices bundled with your plan
- Time of use plans
- Energy monitoring programs
- Loyalty programs
How the Texas electric market works
Even though deregulation can seem confusing, a reputable electricity provider can take you through the process of choosing a plan that's right for you, and make it easy to make the switch.
For more information, see the Texas Public Utility Commission website. The Public Utility Commission (PUC) and the Electric Reliability Council of Texas (ERCOT) have been established to ensure you receive your electricity safely and fairly, and that your rights as a consumer are protected.