The energy market in Texas can be a bit confusing. It comes with acronyms like ERCOT and PUC, and unknown terms like deregulated. If you want to get a better handle on the necessary basics to pick an electric company, here’s what you need to know.
What is a Deregulated Market?
In a typical regulated energy market, electricity companies are in charge of everything — from owning the transmission lines and electric poles to the ability to generate the power and sell it to customers. When a market is deregulated, it’s a bit different. The power companies still own all the infrastructure and still distribute the electricity, but private utility companies are able to compete with each other in order to win areas to which they can supply and sell that electricity.
How Did Texas Become Deregulated?
Currently, Texas has the largest deregulated electricity market in the country, with about 90 percent of the state’s population in deregulated areas. However, it wasn’t always that way.
In the 1880s, the first power station in Texas was built in Galveston. Over the next decade, smaller stations popped up, and electric companies began to hold major monopolies that controlled the entire electric supply throughout the state. The electric sector in Texas stayed that way until the 1990s.
Deregulation began in 2002. It was meant to break up the monopoly that one company had over all of Texas’ electricity, which was causing bills to skyrocket, and introduce competition to make costs more affordable. Generation and distribution of electricity became separated into two buckets, and now both buckets are competitive so no monopolies can form.
How is It Beneficial?
When electricity is deregulated, it means companies can compete with one another. Thus lowering the price of service in the area, and putting the power in residents’ hands to determine which company they’d like to work with to get their energy. It also means that research and development is an ongoing process — the energy companies’ technology isn't stagnant because they’re all trying to earn more business. Deregulation can also lead to better service overall, because customers can switch providers when they’d like to, rather than being forced to stay with one state-led company.
Who Are The Entities of the Texas Electricity Market?
Electricity in Texas isn’t just run by the companies themselves; the market has a handful of different entities that make sure things go smoothly. Let’s learn who they are and what they do.
ERCOT
ERCOT is the Electric Reliability Council of Texas. This group is responsible for ensuring that the electric system in the state is reliable, wholesale and retail markets stay competitive, bills are paid, and that transmission has open access. Basically, they manage and operate the flow of energy throughout the deregulated areas of Texas. It’s a nonprofit that’s overseen by the Texas legislature and the public utility commission.
PUC
The PUC is the Public Utility Commission of Texas. A state government agency, the PUC helps resolve complaints from customers, enacts and enforces utilities-based legislation, and regulates all of Texas’ basic utilities.
TDSPs
TDSPs are Transmission/Distribution Service Providers. They’re in charge of maintaining meters and power lines. You may have heard of them referred to as “the wire and pole company.” TDSPs ensure that electricity gets from the generators to your home or business.
REPs
REPs are Retail Electric Providers. These are all the companies that sell Texans their energy in deregulated areas of the state. They buy the electricity wholesale, sell it to customers, and collect your electric bills. REPs are the companies you interact with for your electricity service.
What Electric Plan Types are Offered in Texas?
According to the PUC, Texas electric customers in deregulated areas can choose from five types of plans.
Fixed Rate Plan
This is the type of plan offered by OnPoint Energy. Your cost does not change month to month; every bill is the same price, regardless of how much electricity you use.
Variable Rate Plan
With a variable rate plan, your electricity costs will change based on what the power market is doing in Texas, and at the discretion of your electric company.
Indexed or Market Rate Plan
These plans have variable rates as well, but the amount you pay is tied to a publicly available index. Your power company bases the prices on that index.
Prepaid Service
Prepaid service is electric service you pay for in advance. It’s pay-as-you-go and often requires payment upfront.
Time-of-Use Service
People using this type of electric service are incentivized to use their power during certain times of the day, like nights or weekends.
The Benefits of Fixed Rate Plans — and OnPoint Energy
If you’re trying to budget accurately month to month, having an energy bill that changes regularly can make it more difficult. With a fixed rate plan, that doesn’t happen, so you can be sure that you’ll stick to your budget regardless of the power situation in Texas. It’s all about consistency — and who doesn’t need some of that right now?
OnPoint offers electric service on fixed rate plans. On top of that, we have exceptional customer service with expanded hours so you can contact us on your time, not just ours. And our plans and bills are easy to understand and simple. You won’t find any jargon here. We want electricity to be easy, and we’re providing that for you.