How does the Texas Electricity Market Work?

America is all about the consumer and the right to choose. The energy market in Texas has followed the path of many other goods and services in the country. In 2002, the energy market in Texas was deregulated, providing Texans the power to select their power company of preference to service energy to their homes and businesses. It is one of only 17 states that have a deregulated energy market, including California, New York, Michigan, and Washington D.C. 

How does deregulation work and what does it mean for the consumer?

The chain for providing power from the source to your home is similar to what you would see with produce and groceries, where food is grown at a farm, sold to a grocery store, and then sold to the customer. 

Basically, a power generation company produces electricity through power plants that they own. They generate power through various sources such as coal, nuclear, natural gas, and also renewable or “green” energy sources including wind and solar power. The power generation company then sells electricity to a Retail Electricity Provider (REP), like Arrow Energy, which provides the customer with various energy plans and rates tailored to their unique household or business needs. The REP stage is where the consumer has choice. This is the company that you can select from a variety of other REPs in your region. The REP is also responsible for customer service and managing any outages or service disruptions in your area. 

REPs work with Transmission and Distribution Utilities (TDUs), which are separate companies that aid in the process of actually delivering the electricity homes and businesses. Their jurisdiction includes creating and maintaining electricity lines, poles, and meters. Unlike the wide variety of REPs to choose from, there are only 6 TDUs in Texas, and the customer does not have the freedom to choose which TDU company will service their home. The TDU comes hand-in-hand with the REP that you end up choosing. 

When you see your energy bill, you’ll see TDU charges. This charge remains the same for all customers in your area. What changes from bill to bill is the electricity plan that you choose, based on your agreement with your REP. Since the energy market became deregulated, there are now hundreds of REPs to choose from, and although the REP is servicing your power, the power lies in the customer to decide which one fits best with their needs. The advantage of a deregulated market is that REPs must provide competitive rates to attract customers, but this means a little bit of extra research on your end. To find the best REP for you, think of which factors are important for you, either as a household or a business. Read our blog on what questions you should ask an REP before signing a contract.

Arrow Energy is an REP that provides flexible and affordable plans with through renewable energy sources in servicing both homes and businesses. Contact us today to learn more about our rates and plans before you commit to an REP!