Electricity Deregulation in Texas
Deregulation means that consumers have a choice of their generation electricity supplier (referred to as Retail Electric Providers or REPs). There are hundreds of licensed REPs to choose from in the State of Texas. Some of the more common ones are Reliant, Gexa, Direct Energy, TXU, and Constellation. No matter who you choose, your geographic location determines who your Transmission and Distribution Service Provider (TDSP) is. These are also referred to as the Local Utility or Local Wires Company. The TDSPs (depicted in color on the map), transmit electricity from the generation plant to your home, install and read the meters and are responsible for maintaining and repairing equipment during outages. In most cities in Texas, the TDSPs also own and maintain the streetlights that cities pay for.
Even though it looks like less than half the state is deregulated, these areas cover some of the most populous parts of the state. For the areas in white (many of which are rural), a more accurate description would be that some of it is regulated and some of it is unregulated (will explain those in a minute).
The five TDSPs are:
- Oncor (formerly TXU Electric, Texas Power & Light and TXU SESCO): serves Dallas-Ft. Worth, Central Texas (including Waco) and some parts of West Texas
- CenterPoint (aka CNP, formerly Houston Power & Light): serves Houston area
- AEP Texas Central (formerly Central Power & Light): serves Corpus Christi and deep South Texas (commonly referred to as “The Valley”)
- AEP Texas North: serves Abilene, San Angelo, North Central and West Texas
- Texas New Mexico Power (aka TNMP): serves small areas of Central Texas, North Texas and West Texas
There are a handful of cities that are split between two TDSPs (ex: Galveston has TNMP and CNP; Lewisville is in Oncor and TNMP) and there are also some cities where part of the city is in a deregulated area and part is not (ex: Austin – a vast majority of the city is served by Austin Energy which is owned by the City, but there’s a very small portion of the city that falls within Oncor’s service area).
The areas in white in the map above include three categories:
- Regulated, Investor-Owned Utilities (IOUs)
- Municipally-Owned Utilities (Munis)
- Electric Cooperatives (Co-ops)
The regulated IOUs are fully regulated by the Texas Public Utility Commission (PUC or PUCT) like the TDSPs are REPs are. The PUC is an agency of the State that regulates electric, water and telecommunications utilities. https://www.puc.texas.gov/
Regulated IOUs include Entergy Texas (Beaumont area), AEP SWEPCO (parts of East TX and Panhandle), Xcel Energy (parts of Panhandle) and El Paso Electric (El Paso and the rest of the far West area of TX). PUC Regulation is important because those utilities have a standard set of rules to follow, that are approved and monitored by the PUC, and customers have protection against unfair/inaccurate billing. For example, if a customer finds they’ve been overbilled and after reaching out to the utility they can’t get a satisfactory resolution, the customer can file a complaint with the PUC and request assistance in getting the overcharge refunded.
Munis and Co-ops are regulated by a board of directors instead of the PUC. See “Coop and Muni FAQs” from the PUC. Unlike the regulated IOUs, REPs, and TDSPs, the PUC has very little to no regulation over the practices and actions on Munis and Co-ops. We’ve encountered a couple instances when we found billing errors for a client billed by a Muni or Co-op, and the utility refused to correct the error or just flat out ignored our claim. Without a regulatory agency to enforce rules and ensure consumers are treated fairly, there’s no standard process to escalate a claim if these utilities don’t do what they’re supposed to do. Their Board of Directors “regulates” the utility, but there’s no oversight by an outside agency so Munis and Co-ops may not always be inclined to do the right thing.
Other Electric Deregulated States in the USA
Per the U.S. Energy Information Administration Status of Electricity Restructuring by State.