Electricity is measured and billed in kilowatt-hours (kWh). A kilowatt-hour is a unit of measure used by most electricity companies, and it measures a single kilowatt of power for 1 hour. The national average charge for electricity is 15.96 cents per kWh used. However, most electricity markets in the United States are regulated, meaning your service provider depends on your address.
Texas, on the other hand, has a deregulated electricity market. That means that residents may choose from multiple Texas electricity providers and plans no matter where they live.
It would seem that this keeps the market competitive as the Texas energy prices are well below the national average. Texas residents pay 8 percent less than the national average for their electricity, and businesses in Texas get it for a whopping 26 percent below the national average.
Here’s a little bit more about the energy rate trends in the state of Texas.
Texas Electricity Market
The Texas electricity market was deregulated in 1999 when then-Governor George W. Bush signed Senate Bill 7 into law. That gave residents the option to choose their own retail Texas electricity providers.
Retail electricity providers in Texas purchase electricity from the wholesale market and sell it directly to consumers at retail prices. They are responsible for ensuring the delivery of service to their customers, billing, and communication with the Electric Reliability Council of Texas. All active companies must register with the Public Utility Commission of Texas, and there are currently over 100 active electric companies in the state.
Texas electric utilities are responsible for actually delivering the electricity to your home or office. They are assigned based on the physical address of the delivery location. Texas electric utilities are also called Transmission and Delivery Utilities (TDUs). They help maintain the electrical infrastructure and deal with any subsequent power outages.
Choosing Texas Electricity Providers
Choosing Texas electricity providers can be a little overwhelming. You don’t want to just pick one and sign on the dotted line because the deregulated market allows for more freedom for both consumers and utility providers.
It’s easy to get stuck in a long, drawn-out contract with a service you are not happy with or don’t need. While it keeps the prices competitive in the market, it also means that some services are better than others.
Many times, a larger company means more stability and better service. Luckily, the U.S. Energy Information Administration (EIA) ranks the electricity providers in Texas by customer base, making it easy to see who the largest companies are. However, smaller up-and-coming suppliers can often undercut the prices of larger companies and offer great service to move in on their customer base.
Comparing Electricity Providers
There are several tips to help you choose between electricity providers in Texas. While price is exceptionally important, it isn’t the only factor. You’ll also want to check customer reviews on the internet and look for issues such as billing problems, poor communication, and unsatisfactory customer service.
Checking the company’s history is also important. A long history with an established website can be an indication of reliable, trustworthy service. Don’t forget to check the size of the company. Bigger isn’t always better, but it can mean a better infrastructure for resolving service issues.
No matter which company you choose to do business with, you’ll want to read the contract carefully. Some companies may hook new customers with introductory rates that skyrocket after the initial period. It also pays to look for hidden fees and cancellation clauses.
You should also review the contract length carefully to ensure it is agreeable before you sign. This is one area where it pays to be very thorough before signing on the dotted line.
In Summary
Just to summarize a little, there are multiple electric utility companies in Texas, but there are really 5 major players. You are assigned one based on your physical address, and they are responsible for delivering electricity to your residence or business. These utility companies are called Transmission and Utility Deliveries (TDUs). They maintain the electric infrastructure and deal with power outages.
Retail Texas electricity providers purchase from the wholesale market and sell directly to consumers at retail prices. Texas is a deregulated market, so consumers may purchase their power from any retail electricity provider they choose, but they should choose their plan carefully.
Retail providers are responsible for paying the distribution providers, billing consumers, and communicating with the Electric Reliability Council of Texas (ERCOT). There are more than 100 Texas electricity providers that consumers may choose to do business with.
Electricity Rate Trends in Texas
Since Texas is a deregulated market, the competitive nature keeps electric prices lower for consumers. Consumers pay 8 percent less than the national average for residential electric service and 26 percent less than the national average for business service. While the energy futures in Texas reflect seasonal changes, the nature of the market keeps prices competitive, and it seems that they will hold steady, barring any unforeseen catastrophe.
Senate Bill 7, which then Governor George W. Bush signed into law in 1999, did a public service for most consumers of electricity in Texas at the time and going forward as they tend to enjoy lower energy prices than the rest of us.
Also read: Moving to Texas for a Better Lifestyle: Planning Ahead and Overcoming Challenges
