Texas Electricity Deregulation: How It Works
Estimated costs are informational. Provider rates and plan terms may change. Confirm current details directly with the provider.
Texas has one of the largest deregulated electricity markets in the world. About 85% of Texas electricity customers can choose their retail electricity provider, creating a competitive market with hundreds of plans from dozens of providers. Understanding how this system works helps you make better decisions when shopping.
A brief history
Before 2002, electricity in Texas — like most of the US — was provided by regulated monopoly utilities. You had one provider, one rate, no choice. Texas Senate Bill 7, signed in 1999 and effective January 1, 2002, restructured the market. Utilities were required to split into separate generation, transmission, and retail companies. Retail competition launched, and Texans gained the ability to choose their electricity provider for the first time.
How the market is structured
Build and operate power plants (wind, natural gas, solar, nuclear). They sell electricity into the wholesale market.
Manages the Texas grid. Runs the wholesale electricity market. Ensures supply meets demand in real time. Operates independently of the US federal grid.
Maintain the physical wires, poles, transformers, and meters that deliver electricity to homes. Regulated monopolies — you cannot choose them. Examples: Oncor, CenterPoint, AEP Texas, TNMP.
Buy electricity on the wholesale market and sell it to you under a plan. You choose which REP to use. Over 100 REPs are licensed in Texas.
Regulates the market, licenses REPs, sets TDU delivery rates, and enforces consumer protection rules. Requires EFL disclosure for every plan.
Which areas in Texas are deregulated?
Not all Texas electricity customers can choose their provider. The deregulated market covers the ERCOT grid, which serves most of Texas. However, some areas remain regulated or are served by cooperatives and municipal utilities that opted out of deregulation.
- Most of Dallas-Fort Worth
- Most of Greater Houston
- Austin suburbs (not Austin proper)
- South and West Texas (ERCOT areas)
- Most addresses in Oncor, CenterPoint, AEP, TNMP territories
- Austin Energy customers (City of Austin)
- San Antonio (CPS Energy)
- El Paso Electric (not on ERCOT grid)
- Many rural electric cooperatives
- Lubbock (partial — transitioning)
Your rights as a Texas electricity shopper
- 1You can switch providers at any time. Switching takes 1–3 business days and causes no power interruption.
- 2Every plan must publish a standardized Electricity Facts Label (EFL) disclosing rates at 500, 1,000, and 2,000 kWh.
- 3Providers must give you written notice before raising rates (on variable plans) or before a fixed term expires.
- 4You can shop on the Texas PUC's official comparison tool (powertochoose.org) or on sites like TrueBill.
- 5If a provider fails, the Texas PUC assigns you to a Provider of Last Resort (POLR) until you choose a new provider. Your power stays on.
What deregulation doesn't change
Deregulation only affects the energy supply portion of your bill. Your TDU delivery charges are still regulated and fixed — they are the same regardless of which retail provider you choose. Power outages are still handled by your TDU, not your retail provider.
Continue Comparing Smarter
Compare plans by estimated cost at your usage, then verify final pricing terms directly with the provider before enrolling.