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Texas

Electricity deregulation in Texas began in 2002 with the Texas Senate Bill 7, which mandated that deregulation be phased into the state over the next several years. Except for the Cities of Austin and San Antonio, the entire state of Texas is now deregulated – meaning that electricity customers can shop around for the supply side of their electricity charges.

Prior to deregulation in Texas, electricity customers were required to purchase electricity at fluctuating rates from their default utility. Deregulation was established to break down this monopoly, give customers a choice, and drive electricity prices down.

“Retail electricity providers” began offering the sale of electricity supply shortly after deregulation began. Texans are not required to switch to a retail electricity provider, and will continue to receive the supply of electricity from their default utility until they decide to switch. Utilities have no incentive to supply electricity since they are required by law to resell electric supply at no profit. The utilities can only profit from the transmission and delivery of the electricity – which is not affected by which company sells the supply of electricity. Since the utilities often charge higher rates than electricity providers, there is little reason to stay with the utility for electric supply.

No matter if the utility or a retail provider supplies the electricity, the utility will continue to send electric bills, charge for delivery and transmission, maintain wires and poles, and respond to emergencies. Texas utilities include:

What You Need to Know Before Switching

When searching for a new retail electricity provider, you need to compare not only the pricing of electricity with what you are currently paying but also the types of plans and offers from each provider.

In addition to rate pricing, compare:

  • Length of Contracts
    • Most providers offer multiple contract lengths, including month-to-month and 3 to 24 month terms. Some don’t mind if you cancel your contract, others incur a termination fee. Take some time to understand which you’d prefer for your home and which fits you the best financially.
  • Type of Rate Pricing
    • There are two main types of pricing in contracts: fixed and variable. With a fixed contract, the electric rate price you sign up for cannot change for the duration of your contract. With a variable contract, the rate price is subject to increase or decrease each day or month, based on the time of year and price of electricity for the provider at that moment. Variable pricing is often higher, but may be a good choice for those that don’t want to be locked into a contract.
  • Other Factors that May Add or Subtract Value
    • Factors that may add value include multiple bill pay options, green/renewable electricity sources, guaranteed savings programs, and other incentives to switch. Factors such as extra charges for using significantly more electricity than usual can devalue a plan.

Use our FREE Compare & Switch tool at the top of this page to compare rate plans of some of the best electricity providers available in your area. Switching is fast and easy.

Learn more about Texas electricity providers.