How Retail Electricity Choice Works in TexasBy Javier Loya
In much of Texas, households pick who sells them power. Here is how the system is built and what to look at before choosing a plan.
In most of the United States, the company that delivers electricity to a home is also the company that sends the bill. Large parts of Texas work differently. Since the state restructured its electricity market, many households and businesses choose the company that sells them power, while a separate utility keeps the wires running.
Three roles, one bill
Generators produce electricity. Transmission and distribution utilities own and maintain the poles, lines and meters in a given area. Retail electric providers buy power on the wholesale market and sell it to customers through plans with different terms. The customer picks the retailer; the local utility stays the same regardless of that choice.
Because the wires company does not change, reliability of delivery in a neighborhood does not depend on which retailer a customer selects. Outages and line repairs remain the responsibility of the local utility.
Where choice applies
Retail choice covers the areas of Texas that opted into the competitive market. Some cities and rural areas served by municipal utilities or electric cooperatives are not part of it. According to ERCOT, about 75% of the load on its grid comes from competitive-choice customers, covering nearly 8 million homes and businesses.
Reading a plan
Plans are typically described by contract length, whether the rate is fixed or variable, and any fees for early cancellation. Each plan in the competitive market comes with a standardized Electricity Facts Label, which shows the average price at several usage levels. Comparing labels side by side is the most direct way to see how plans differ for a household's actual usage.
A useful habit is to check past monthly usage before shopping. A plan that looks inexpensive at one usage level can cost more at another, and the facts label makes those differences visible.
Why it matters
Choice puts a decision in the hands of the customer. Understanding the separate roles of generator, utility and retailer makes that decision easier and helps people focus on the terms that affect their bills.