About Electric Deregulation

Texas ROSE has been actively involved in deregulation discussions at the Public Utility Commission of Texas (PUC). We opposed deregulating electric utilities at the Texas Legislature in 1999 because we believed then, and still believe now, that deregulation does not benefit residential and low-income consumers. Since deregulation was adopted, we have continued to advocate for programs to provide residential and low-income households with continuous service, fair customer protection rules, and effective energy efficiency programs.

Frequently Asked Questions

What is electric deregulation?
Is my electricity regulated or deregulated?
How have the deregulated companies changed?
Has electric deregulation decreased average rates?
How has electric deregulation been of benefit to residential electric customers?
What type of rate is the best deal?
What is a promotional rate?
What types of fees can I be charged?
Is there anything I should consider besides price?


Frequently Asked Question Answers


What is electric deregulation?

Electric deregulation means many things.

You can choose your electric utility the way you choose telephone service.

The Public Utility Commission of Texas (PUC) no longer has control of the amount you are charged for electricity.

People living in deregulated areas must buy their electricity from a retail electric provider (REP). Be careful when choosing. Prices vary, plans vary and the services offered to the individual by the companies vary. Many customer protection standards previously set by the PUC are now set by the electric company.

The provider of last resort (POLR) is the only company that must serve everyone. Since the electric market opened POLR, rates have been the highest in the state.

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Is my electricity regulated or deregulated?

On January 1, 2001 the following service areas were deregulated: TXU Electric, Reliant HL&P, Central Power & Light, West Texas Utilities, Southwestern Electric Service Company, and Texas New Mexico Power Company.

Municipally-owned utilities and rural electric cooperatives can opt in to the market. Only Nueces and San Patricio Rural Electric Cooperatives have opted in to the deregulated market. All others are regulated by the city council or the electric cooperative board.

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How have the deregulated companies changed?

A regulated utility company is responsible for all aspects of your electric service. In deregulated areas there are three types of companies that provide your electricity. These are the power generator, retailer (REP) and the transmission and distribution utility (TDU) or wires company. The wires company remains regulated.

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Has electric deregulation decreased average rates?

Not according to official government data. In fact, average electricity prices paid by residential customers in deregulated areas of Texas have been anywhere from 9 to 46 percent higher than average prices paid in areas of Texas outside deregulation. Moreover, according to the available data at the United States Energy Information Administration, average rates in deregulated areas of Texas historically have been higher than the nationwide average, while average rates in areas of Texas outside deregulation are generally lower than the nationwide average.

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How has electric deregulation been of benefit to residential electric customers?

The PUC encourages consumers to shop for a new electric provider. According to prices posted on PUC’s Electric Choice Website residential customers should be able to lower their bills by switching to another provider. When you shop, be sure to compare electricity facts labels, know the rate you are being charged, how often the rate can change, and read the terms of service carefully to check for penalties for changing your mind, and collection and disconnection policies.

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What type of rate is the best deal?

It depends. Fixed rates are the most common. Your rate stays the same for the duration of your contract. Variable and indexed rates can change monthly. Some companies are also introducing time of use rates that vary by the time of the day or the day of the week you use the electricity. Taking a plan where the rates can change may be beneficial for some households. However, be sure that you are monitoring the rate and watching for changes that may cost you more rather than less and be ready to switch to another plan with the same or another REP.

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What is a promotional rate?

Promotional rates are often called teaser rates that are offered to new customers for a limited time. If you decide to take a promotional rate, be sure to ask how long you will be billed at that rate. The number of days you receive the rate depends on when you switch and the date of your billing cycle. Ask the REP to arrange your switch so you receive the rate for the full allowable term which is usually 30 days.

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What types of fees can I be charged?

There are many fees that a REP can charge a residential customer. These fees should be fully disclosed in the Electricity Facts Label and/or Terms of Service Agreement. Some REPs list their fees on the Electricity Facts Label. Others refer the reader to the Terms of Service Agreement. You can be charged fees for low usage, disconnection and reconnection processing, processing of your bill payment, a call to the customer service center and other situations that will raise your monthly bill. Always read the Electricity Facts Label and the Terms of Service to be sure you understand the fees you may be charged.

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Is there anything I should consider besides price?

Price is a big consideration. However, there are differences in companies that might matter to you. Some are new start-ups and others have been in business for years. Some have high customer complaint records which you can access on the Power to Choose website. Some have 24/7 customer service operations while others do not.

Another consideration for many people is the environmental performance of the electricity they buy. Some plans have higher emissions ratings than others and you may want to take this into consideration. There are many plans that are all or part renewable energy products.

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A Special Notice About Prepaid Service

New rules for prepaid electric service went into effect on June 1, 2011. When you have prepaid service you must pay before you use the electricity. You do not receive a monthly bill. As you use power, the cost of that power is deducted from your account. The REP will monitor the amount of money remaining. When it drops below a certain amount you will receive an electronic disconnection notice anywhere from one to seven days prior to disconnection. Disconnection notices for prepaid customers must be electronic.

Many REPs are now offering prepaid service to residential customers. The target market for prepaid service is low-income households. Under a prepaid plan the customer does not receive a monthly bill. It is the customer’s responsibility to monitor the account. It is the REPs responsibility to provide information electronically about the account. Many bill payment assistance programs do not provide energy assistance to customers taking prepaid service.