Electric Companies in Texas

Electricity in Texas: Facts and Figures

With a population of over 28 million and a thriving industrial sector, Texas is the state with the highest energy consumption. Considering both electricity and fuel consumption, Texas accounts for around 1/8 of total US energy usage. The industrial sector represents around 50% of total energy consumption, transportation accounts for 25%, and the remaining 25% is split almost equally among residential and commercial consumption.

The Texan electricity sector had its highest demand peak ever recorded in August 2016, with a value of over 71,110 megawatts. However, the estimated peak for 2018 is 72,974 megawatts, which will break the previous record.

  • High demand for electricity in Texas can be attributed in great part to the oil and gas industry: regions like the Gulf of Mexico and the Permian Basin have huge reserves of fossil fuels, and Texan refineries can process over 5.6 million barrels of crude oil per day.
  • During summer, space cooling also becomes a considerable load: a single air conditioner does not have a significant impact, but demand reaches the scale of gigawatts when you consider there are thousands of buildings using them

General Figures About Electricity in Texas

According to 2018 data published by the US Energy Information Administration, monthly electricity generation in Texas is broken down as follows.

electricity generation in texas

Texas uses around two times as much electricity as Florida, the state with the 2nd highest consumption. Most of the power is still generated from fossil fuels, but the growth of renewable energy sources in Texas has been remarkable in recent years. They only accounted for 3% of generation in 2006 and 10% in 2010, but are now the second-largest source of electricity.

  • Wind power has grown very fast over the past decade: Texas is currently the state with the highest wind power capacity, and it was the first state to surpass 10 GW in 2011.
  • Solar power also has significant potential in Texas, and the best sites are found to the west of the state. Although solar power is still undeveloped compared with wind power, its growth has accelerated thanks to recent cost reductions in photovoltaic technology.
  • Solar, hydro, biomass and geothermal power add up less than 2% of the state’s capacity.

A common misconception is that Texas wastes a lot of power, but that is simply not the case. When you calculate residential energy consumption per person, Texas is among the most efficient states, according to the Energy Information Administration. Statewide energy demand is high due to its sheer population and size, as well as the highly industrialized economy.

How the Texas Electricity Market Works

Texas has a deregulated electric sector, which means you can choose your electricity provider in most areas. The companies selling power are called Retail Electricity Providers (REP), and they offer a wide range of electricity plans.

  • The Public Utilities Commission of Texas (PUCT) has reported there are over 100 REPs offering over 400 different electricity plans.
  • The power generation mix is disclosed in many of this plans: you can choose a provider offering 100% renewable energy, or you can simply choose the lowest kWh price if you want to minimize power bills.
  • Over 92% of electricity consumers have already changed providers at least once, according to the PUCT.

Energy Companies, or Retail Electricity Providers (REP), share the power grid to deliver electricity to their clients, since it would be impractical and extremely expensive to have a separate network for each provider. Instead, electricity consumption and payments are managed with smart power meters: the entire process is carried out digitally when you want to switch providers, with no rewiring needed. There are six transmission and distribution utilities (TDU) in the deregulated market:

  • American Electric Power – Texas Central Company
  • American Electric Power – Texas North Company
  • CenterPoint Energy
  • Oncor Electric Delivery Company
  • Sharyland Utilities
  • Texas-New Mexico Power

The entire deregulated market is under the oversight of the Electric Reliability Council of Texas (ERCOT). The responsibilities of ERCOT include managing the flow of electricity, financial settlement in the wholesale electricity market, and managing the provider switching process.

In general deregulation of the Texas electricity sector has had a positive impact: Texas is the state where consumers have access to the widest selection of electricity plans. Electricity retail rates have dropped over 60% since the last regulated prices in 2001, when you compare yearly values without the effect of inflation.

Complementary Activities by the Public Utilities Commission

The PUCT manages energy efficiency programs where utilities are legally required to participate, including the power companies still outside of the deregulated market. Each utility is responsible for its service territory, and these programs were very successful in 2015: the demand reduction was 206% of the target, and the energy savings were 168% of the target.

Provider choice in the electricity sector brings options, but it may also lead to confusion. Considering this, the PUCT also manages educational programs, to help customers make informed decisions when comparing power providers.