Texas Electricity and How It Works
Electricity in Texas is different than in many other states. Ever since the early 2000s, Texas has had deregulated electricity which means that you have the power to choose your provider. However, this has made electricity extremely competitive in Texas, making it difficult to know who the best company is for you. Contact us at Energenie to find out how we can help you choose the right plan and power company. Our goal is to make your life easier, electricity cheaper, and energy bills smaller.
In this article, we will look at how electricity works in Texas and how to find the best rates near you. Let’s get started!
How Does Electricity Work in Texas?
For starters, let’s look at how the electricity grid works in Texas. This will give you a better understanding of where your power comes from and who’s providing it to you. There are several different components and players involved in Texas electricity. Here are some of the main ones and what their roles are.
- Power Generators
The power generators are the companies that create different types of energy, including electricity. Bear in mind that they aren’t your provider, but instead, they sell the energy they produce to REPs, which are the next cogs in the system.
- Retail Electricity Providers (REPs)
REPs are the electric companies you deal with daily and purchase your electricity from. The REPs buy electricity from Power Generators and then provide it to you, the customer. You can think of them in the same way you think of your internet, TV provider, or phone carrier. They all have various plans and rates depending on what they can provide to you.
- Transmission and Distribution Utilities (TDUs)
TDUs are separate entities responsible for ensuring that the electricity makes it from the provider to your home or business. They own the power lines, electric meters, electric poles, and wires that bring electricity to you. Unlike REPs, of which there are over 100 companies to choose from, there are only six TDUs in Texas. The TDU that serves you is dependent on which REP you choose.
You, the customer, then have the option of choosing your REP, who works with a predetermined TDU. The REP is who you contact in case there’s a power outage, and you have little to nothing to do with the TDU they work with. The TDU contacts the REP, which then interacts with you.
Generators are what the power-generating companies use to create electricity.
All in all, electricity ends up getting to you like this: Power Generators > REPs > TDUs > Customers. Power generator companies use generators to create electricity. That electricity is then sold to REPs, who then sell it to you. TDUs are the companies responsible for making sure that the electricity gets to you and is responsible for repairing downed lines, damaged meters, and power outages.
What is Deregulated Energy?
Many states in the U.S. have predetermined who your electric provider is, and there are no REPs. On the other hand, Texas has what’s known as a deregulated energy market. Deregulation happened in 2002, and it affects most areas of Texas. There are, however, a few cities and regions that still don’t have deregulated electricity. Contact us at Energenie to determine if you qualify for deregulated energy and find the best rates in your area.
Deregulated electricity has made the energy market in Texas extremely competitive. There are now over 100 REPs that receive their electricity from over 600 different power generators. This electricity is then distributed via TDUs to the customer. However, because there are so many REPs, there are often dozens of options available in each area.
Each of these companies is competing for your business and tries to have the lowest rates the best deals possible. As a result, they often have hidden rates and fees that sneak up on you if you don’t know what to look for. Deregulated energy gives you the power to choose your retailer, but it also makes it difficult to find the best company for you.
What to Look for in a REP
Choosing the right REP is extremely difficult due to the massive amount of options that are available. It’s hard to uncover hidden fees until they suddenly appear in your monthly electric bill. For those of us who are on a budget, unexpected fees are unwelcome. You should look for a REP that is honest, transparent, and gets excellent reviews online and from neighbors.
How do Electric Rates Work in Texas?
Electric rates in Texas are determined by REPs. They purchase electricity from power generator companies and then turn around and sell it to you. The rate that the REP charges you is dependent on several factors.
- How much do they have to pay for the electricity?
If the REP is getting charged 5 cents/kWh by the power generating company they deal with, their rates will likely be lower than if they have to pay 7 cents/kWh.
- How much do they need to charge to turn a profit?
REPs aren’t going to lose money when they sell you their electricity. The more they have to pay their power generators, the more they need to charge to turn a profit.
- What other REPs are charging for their electricity.
Many areas in Texas have access to multiple if not dozens of REPs. This results in a stiff competition where REPs are constantly trying to underbid each other and offer the best rates.
How to Find the Best Rates in Texas
If you’re in the market for a new REP but don’t know who to pick, Energenie is here for you. Contact us to find out how we can help you save money with your REP. We will enter your zip code into our database and find the best REPs that service your area. We will also make sure that you’re aware of any hidden fees or special deals that each company is providing.
EnerGenie is your personal electricity shopping assistant. By signing up with EnerGenie, you’ll have peace of mind knowing you have a cheap electricity rate locked in to avoid rate hikes. You’ll also never have to worry about falling onto a high variable electricity rate because we continuously monitor your account and the market to sign you up for another great rate when your contract is coming up for renewal.
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