Otis Singleton
In some places, such as Texas, the electricity market is deregulated, meaning that customers must shop for an electricity provider. In such places, the utility company and the electricity provider are separate companies. This means that you will have one company that delivers power to your home and handles emergencies, and another company that provides power, handles customer service, sends your bill, and coordinates with the utility company. As a result, the address will determine which utility company serves a particular location, and this may differ between neighbouring addresses.
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What You'll Learn
Energy deregulation in Texas
Texas has the largest deregulated electricity market in the US. Over 26 million Texans can choose their energy provider, which is over 90% of the state's population. The energy market is managed by the Electric Reliability Council of Texas (ERCOT), which does not connect with other grids and cannot import electricity during power shortages.
The history of energy deregulation in Texas dates back to World War II. Utility companies in the state formed the Texas Interconnected System (TIS), which had the main purpose of powering military manufacturing centres on the Gulf Coast. Power companies soon realised the benefits of being interconnected, and the TIS became ERCOT in 1970, under the oversight of the Federal Energy Regulatory Commission (FERC).
The political unrest in the 1970s, including rising energy prices from the 1973 energy crisis, helped bring about the beginnings of deregulation. The United States has three power grids: ERCOT covers 90% of Texas, serving Houston, Fort Worth, Dallas, and San Antonio residents. The Southwest Power Pool maintains parts of the grid in the Texas Panhandle, and the Western Electricity Coordinating Council (WECC) covers some western areas of Texas. The Eastern Interconnection provides electricity to parts of the Texas Panhandle as well.
In 1975, the Texas legislature introduced the Public Utility Regulatory Act (PURA), which created the Public Utility Commission of Texas (PUCT or PUC). The PUCT’s role was to regulate the state’s electric and telecommunications utilities, from their services to their rates. The PURA rules also hoped to encourage more efficient energy production and diversification into renewable energy sources. The National Energy Policy Act of 1992 allowed the Federal Energy Regulatory Commission (FERC) to encourage competition within the wholesale electricity market. By 1995, the Texas Senate had deregulated the state’s wholesale market. In 1999, the Texas Senate passed Senate Bill 7, which deregulated the state’s energy market, and in 2002, energy deregulation in Texas officially began.
Deregulation means removing restrictions or regulations, often to a specific industry. In the case of Texas, all or part of the energy sector has been put in the hands of the free market, with state regulators overseeing affairs. In deregulated Texas, there are plenty of options for electricity plans, electricity rates, and electricity companies. The Texas electric industry is a free market, with more than 100 retail electricity providers (REPs) all competing for business. The PUCT oversees this competition, but Texans have a lot more choice when it comes to their power than customers in regulated energy markets.
There are benefits and drawbacks to this system. On the one hand, Texans can save on power bills by choosing an adequate plan, but on the other hand, a poor selection of energy providers can lead to above-average bills. Additionally, having so many options can lead to confusion and choice paralysis, especially when dealing with a technical topic like energy.
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Utility companies and electricity providers are separate entities
In the United States, you can easily find utilities by address. Usually, there is only one electric utility company for a region, which may also serve as the gas utility. However, in some states, there are additional energy choices to make. In deregulated areas, such as Texas, you must choose your electricity supplier, and this can be a different company than the local utility. Over 85% of Texas is deregulated, meaning that for most residents, the utility company and the electricity provider are separate entities.
In regulated areas, one utility company provides all services, and you cannot choose your utility company. It is assigned based on your address. A utility company delivers power to your home and handles emergencies and outages. To find your utility company, you can use an ESID Lookup Tool (Electricity Service Identifier), your electricity bill, or ask your landlord or neighbours.
A retail electricity provider (REP), on the other hand, provides power, handles customer service, sends your bill, and coordinates with the utility. You must shop for and choose your REP, and you can compare rates and providers online. You can also find your REP by looking at your electricity bill, where the name of the provider will be listed.
Therefore, in deregulated areas, it is common for utility companies and electricity providers to be separate entities. This can be a source of confusion for those moving to these areas, as it is not a familiar concept in regulated regions.
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Different electricity rates and plans
In Texas, residents and businesses have had the right to shop for electricity rates and plans since 2002 due to deregulation. This means that while your area has a utility provider, you must choose your energy provider.
There are hundreds of plans spanning different rates, terms, and deals. The electricity rates and plans offered for your address will depend on what electric company serves your area. Some zip codes are split between utility companies, so you and your neighbour might have different utility companies.
Electricity rates in Texas range between 11¢ and 25¢ per kilowatt-hour, with most households paying between 11¢ and 14¢. The average electricity rate in the US is 12.89¢ per kilowatt-hour, with residential rates varying from state to state. For example, residential rates in North Dakota are 10.21¢, while in Hawaii, they are 42.34¢.
There are several types of plans to choose from, including fixed-rate plans, variable-rate plans, time-of-use plans, and prepaid plans. Fixed-rate plans give you the same price per kilowatt-hour for all your power, while variable-rate plans fluctuate month-to-month, which can be beneficial for short-term users but may result in higher costs during peak seasons. Time-of-use plans offer discounted electricity during off-peak hours, and prepaid plans are pay-as-you-go with no deposit or credit check requirements.
When choosing an electricity plan, it is important to consider your usage patterns and shop around for the best plan for your needs. You can use online resources, reach out to electric companies directly, or use platforms like Power Wizard to compare different companies and plans.
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Choice of energy providers
Energy markets in some states and provinces in North America are deregulated, meaning that customers are not forced to receive supplies from their utility companies and can choose their energy suppliers. This leads to competition and often results in lower prices or value-added services.
In deregulated areas, you must choose your electricity supplier, which is also known as a retail electricity provider (REP). The REP provides power, handles customer service, sends your bill, and coordinates with the utility company. The utility company, on the other hand, delivers power to your home and handles emergencies. You are assigned a utility company based on your address.
There are several ways to find your electricity provider. If you live in a place with energy choice, you can use your energy bill to understand the pricing of your energy plan and contact your provider to learn about the energy plan for your address. You can also use online tools such as Choose Energy and Electric Choice, where you can enter your ZIP code and find supplier information. State Public Utility Commission websites also offer directories of local providers, and online marketplaces like EnergyBot and Save On Energy allow you to compare rates and providers.
If you do not live in a deregulated area, you will not be able to choose your utility company as it is assigned based on your location. In this case, the utility company also acts as your electricity provider.
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Determining which companies service your address
Your utility company is assigned based on your address and delivers power to your home, handles emergencies, and manages your electricity meter. Your REP, on the other hand, sells you electricity, handles customer service, sends your bill, and coordinates with the utility company.
To find out which companies service your address, you can try the following methods:
- Check your electricity bill: Look for a section that mentions "electric supply charges" or "supply services," as the name of your electricity provider may be listed there.
- Ask your landlord: If you're renting, your landlord can provide information about the utility companies servicing your address and whether you have a choice of electricity providers.
- Visit the website of the local utility commission: State Public Utility Commission websites offer directories of local providers, and you can also search for energy sections on your state's website.
- Contact local government offices: These offices maintain records about public utilities and can provide information about service providers in your area.
- Ask neighbours or nearby businesses: They may be able to provide insights into which companies service your area.
- Use online tools: Websites like Choose Energy, Electric Choice, EnergyBot, and Save On Energy allow you to compare rates and providers by entering your ZIP code or address.
- Use a comparison site: Sites like Power Wizard allow you to compare multiple electricity companies and plans simultaneously.
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