Who Has Energy Choice in Texas?

The Power to Choose Electricity in Texas 

The Texas electricity market was deregulated in the year 2002, allowing Retail Electric Providers (REPs) to compete in a free market. In other words, electric utilities no longer hold a monopoly over the energy supply in Texas. These days there are over 120 competing power companies in Texas. 

Currently, around 85% of Texans live in energy deregulated cities, and this includes Houston and the Dallas/Fort Worth metroplex. However, electricity remains regulated in many cities, which are represented by the Texas Public Power Association (TPPA).

The TPPA has 72 member cities that have decided to remain outside of the deregulated market. These municipal utility companies serve 5.1 million Texans, representing around 15% of electricity consumers. The largest of these municipal electric companies is CPS Energy in San Antonio.

Why Haven’t All Cities in Texas Been Deregulated?

You might be wondering then, why can’t all Texans choose their electric providers? This has to do with how deregulation was legally structured: it was made mandatory for investor-owned utilities, but optional for municipal utilities and electric cooperatives.

In other words, these companies can decide not to participate in the competitive retail electricity market.

• As implied by their name, municipal utilities normally serve a specific municipality and are owned by the city government.
• On the other hand, electric cooperatives are owned by their customers, and profits are either reinvested or distributed among electricity consumers.

Municipal utilities and electric co-ops are examples of publicly-owned utilities, and they are both non-profit organizations. Although there are exceptions, municipal utilities are typically found in urban areas, while electric cooperatives are often established in rural areas. From a financial standpoint, municipal utilities in Texas are very stable businesses, most of them having a bond rating of A or A+.

These companies can only become deregulated through a resolution by their board of directors or governing body; however, once they agree the process is irreversible.

Texas Cities Without a Choice in Electric Providers 

As mentioned above, the TPPA currently has 72 member cities. This section of the article will focus on the largest cities with regulated electricity, and municipal power companies who are ERCOT members. 

The following table lists the municipal utility companies who are ERCOT corporate members. Note that deregulation is not mandatory for membership.

The list of electrical cooperatives who are part of ERCOT is much longer, with 40 corporate members and one associate member.

The cities of El Paso and Amarillo are served by investor-owned utilities: El Paso Electric and Southwestern Public Service Company (Xcel Energy), respectively. However, the local wholesale markets and power grids are not ready for a competitive retail market, and electric choice is not available yet.

The areas served by Entergy Texas and AEP SWEPCO in eastern Texas also lack electric choice, even when these companies are private. These areas have not developed adequate conditions for a competitive electricity market, and deregulation has been delayed.

Lubbock – The Next Texas City to Deregulate Electricity

The city of Lubbock utilities is a special case. In June 2021, Lubbock Power & Light (city-owned utility) will join ERCOT, but this does not mean deregulation and electric choice will happen right away.

• LP&L will have the option of purchasing electricity from other parts of Texas, which could lead to lower electricity prices for its customers.
• LP&L currently purchases all of its electricity from Xcel Energy.
• In preparation for this, LP&L is upgrading its transmission infrastructure to enable interconnection with ERCOT.

Electricity providers will be chosen by LP&L, while Lubbock citizens will continue to purchase their power from them. In other words, electricity choice will be available for the city in general, but not yet for individual citizens.

Do You Have Electricity Choice?

If you live in a region of Texas without a retail electricity market, the outlook depends on your location and Transmission and Delivery Utility (TDU).  You can search for your TDU here at Quick Electricity. 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, deregulation could happen shortly if you live in El Paso, Amarillo, or the Entergy Texas and AEP SWEPCO service areas. The retail electricity market will be available as soon as the grid infrastructure and wholesale market deliver the right conditions.

Texas Cities with the Power to Choose

There are over 400 cities in Texas within the free energy market.  Major deregulated cities are Houston, Dallas, Fort Worth. View our complete list of energy deregulated cities in the state. Ready to shop for a new electricity provider? Find your next power company at Quick Electricity.