Texas Electricity Deregulation Explained

Texas Electricity Deregulation

You’re not alone if you’re confused by words like “energy deregulation” and all of the other complicated electricity jargon. Keep reading to learn more about what energy deregulation is, how it works, and what it means for you.

What does Electricity Deregulation Mean?

Electricity deregulation in Texas has been one of the most successful experiments in the history of retail energy. Before we get into why deregulation matters, let’s start with some background information on how we got here in the first place.

On January 1, 2002, the Texas State Legislature decided to deregulate the electricity industry and open up the supply of electricity to competition. Since then, the state’s consumers have been able to choose from a wide array of competitively priced service plans of their choice. What this means is that Texans, like you, can choose among dozens of competitive providers. In some cases, you can even choose from multiple suppliers within your own neighborhood!

This is the biggest difference between the regulated and deregulated electricity markets. In a regulated market, your local utility company would set the rates for you and your neighbors and you would not have the choice to shop around and look for competitive rates. However, with energy deregulation in Texas, you have more options than ever before! You can choose from different electricity providers, electricity plans, and electricity rates (for both residential and commercial) instead of having to settle for whatever your local utility company offers.

The Benefits of Deregulated Energy

Power to Choose

The primary purpose of energy deregulation was to remove barriers that prevent customers from buying electricity from their choice of supplier. In a deregulated market, you can easily switch between providers and have the freedom to choose plan types that best fit your needs. 

Competitive Pricing

More competition means lower prices. Retail electricity providers are incentivized by deregulation to keep the costs low in an effort to attract more customers. Roughly 85% of the Texas power market is deregulated with over 100 retail electricity providers all competing for your business. 

New and Improved Service

The goal of deregulation is not just to lower prices through competition, but also offer choices in regards to innovation and electric plans. To create more value for customers, energy providers are incentivized to be more innovative with their plans and services. They offer loyalty programs, giveaways, and promotions to stand out from the competition and enhance customer experience – which is great news for consumers like you!


While there are plenty of benefits to deregulation, one major drawback is that some companies may charge higher rates than others do for similar products or services. That’s where shopping around comes into play: you can compare plans from different suppliers and find one that fits your needs best—without signing up blindly with any provider you first encounter online or over the phone.

At Arrow Energy, all our plans and products are simple, straightforward, and honest. We don’t believe in hidden fees and surprise charges. With our low-cost rates, renewable energy options, a Texas-sized rewards program, and exceptional customer service, we are here to make sure you’re happy with your energy.