Regulated vs. De-Regulated Energy
Estimated reading time: 5 minutes
Texas deregulated its electricity sales market in 2002, opening the market to competition among Retail Electric Providers. It ended the monopoly of the electric utility companies over energy supply in the state of Texas. There are now over 120 competing power companies in Texas.
Currently, approximately 85% of Texas homeowners live in energy-deregulated cities. This includes large cities such as Houston and the Dallas/Fort Worth metroplex. The remaining 15% of cities, which are energy-regulated cities, are represented by the Texas Public Power Association (TPPA).
As of 2020, there are still 72 members cities of the TPPA who have elected to remain outside of the deregulated market. This represents about 15% of Texans electricity consumers. The largest of these municipal electric companies is the San Antonio utility company called CPS Energy.
Why are not all Texas cities deregulated?
If deregulation increases competition in the market and lowers prices, how come then that not all Texas cities have opted to become deregulated and allow their residents to choose their electric providers?
This stems from the way the deregulation process was legally structured. Legislation made it mandatory for investor-owned utilities to become de-regulated, but optional for municipal utilities and electric cooperatives. Thus, these companies can decide not to participate in the competitive retail electricity market.
Municipal Utility: A municipal utility normally serves a specific municipality and is owned by the city government.
Electric Cooperative: Is owned by its members (which are its customers). The profits are either reinvested into the cooperative or distributed among consumers.
These two types of utilities are both non-profit organizations, and they are both publicly owned utilities. Electric cooperatives are often found in rural areas, while municipal utilities tend to be found in urban areas. Financially speaking, municipal utilities in Texas are very stable enterprises, with the majority of them having very strong bond ratings.
The process of converting from a regulated to a deregulated market will require a resolution from the board of directors or another governing body. Some municipalities are hesitant to make this change since once an energy market is deregulated, the process is irreversible.
List of energy regulated Texas cities
The Texas Public Power Association (TPPA) currently has 72 member cities.
Below, we listed the largest cities that are still regulated and their respective municipal power companies. All the power companies listed below are ERCOT members.
|City||Utility Company||Additional information|
|Austin||Austin Energy||Some surrounding cities are deregulated, like Manor, Pflugerville, and Lakeway.|
|Brownsville||Brownsville Public Utilities Board||Some areas to the north are deregulated.|
|Bryan||Bryan Texas Utilities|
|Brenham||City of Brenham Electric Department|
|Burnet||City of Burnet Electric Department|
|College Station||College Station Utilities|
|Cuero||City of Cuero Electric Department|
|Fredericksburg||City of Fredericksburg Electric Dept.|
|Denton||Denton Municipal Electric||Some parts of the city are deregulated, including surrounding cities such as: Lake Dallas, Hickory Creek, Shady Shores, Corinth, Lantana, Aubrey, Justin, Krum, Ponder.|
|Garland||Garland Power & Light||Small areas of the city are deregulated.|
|Georgetown||Georgetown Utility Systems||Most of Georgetown, including areas of Round Rock, are regulated. Surrounding cities are deregulated, such as Serenada, Jarrell, and Andice.|
|San Marcos||San Marcos Electric Utility|
|San Antonio||CPS Energy (City Public Service)|
|Greenville||GEUS (Greenville Electric Utility System)||Only deregulated in parts of the city, including surrounding areas like Wieland and Cash|
|Kerrville||Kerrville Public Utility Board|
|New Braunfels||New Braunfels Utilities|
The list above only represents municipal utility companies. The list of ERCOT member electric cooperatives is much longer and includes 40 corporate members and 1 associate member as of the end of 2020.
El Paso is owned by an investor-utility company named El Paso Electric but currently does not yet have a competitive retail market since the power grid is not ready for it at this time.
Amarillo is owned by an investor-utility company named Southwestern Public Service Company. Electric choice is not available to Amarillo residents yet because the wholesale market and power grid are not ready for it yet.
Entergy Texas and AEP SWEPCO – East Texas
Electric choice is also lacking in the eastern Texas areas served by Entergy Texas and AEP SWEPCO although these companies are private investor-owned utility companies. It has taken time for these areas to develop adequate conditions for an electricity market, and deregulation is delayed until the proper infrastructure is completed.
The city of Lubbock has a unique situation. Lubbock Power & Light which is a city-owned utility will join ERCOT in In June 2021. Nevertheless, deregulation is not as likely to happen immediately.
Texas Power & Light (LP&L) will for a certain amount of time have the option of purchasing electricity from the rest of the state, which could result in cheaper electricity for its customers. The company is currently upgrading its transmission infrastructure in preparation for interconnection with ERCOT. LP&L will choose the electricity providers, while Lubbock citizens will continue to purchase their power from LP&L.
Essentially, this means that energy choices will be available to the city in general, but not to the individual citizens.
Do I have the Power to Choose my own plan?
Texans living in regulated regions, unfortunately, are not able to choose their own plan. Your electric choice eligibility will depend on your location and Transmission and Delivery Utility (TDU) company.
You can check your choice eligibility on our comparison page. If you purchase electricity from a municipal utility or an electric cooperative, deregulation is only possible if the company voluntarily joins the retail market.
On the other hand, if you live in El Paso, Amarillo, or the Entergy Texas and AEP SWEPCO service areas you may be already able to choose your Retail Electric Company. The retail electricity market will be available to you once the grid infrastructure is updated.
Texans with Power To Choose
If you belong to the 85% of Texans that have the Power to Choose their own electric company, you can shop for a better electricity plan today. We compare energy plans in your area and find the best plan for your specific monthly usage.
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