FAQs 1324×442

Deregulation in Texas FAQ’S

What is electric industry restructuring?

Starting Jan. 1, 2002, the electric industry in Texas was restructured and partially deregulated to provide customers choices in many markets. On that date, investor-owned electric utilities officially began to compete for electric customers. Deregulation means that providers, other than utilities, may compete for retail customers formerly served by regulated utilities.

What does that mean to me?

That depends on where you live. If you receive electric power from a public power provider, such as a city-owned utility or member-owned cooperative, your provider can choose whether or not to opt in to competition. Most public utilities are taking a “wait-and-see”approach to customer choice.

Why aren’t municipal utilities and cooperatives required to offer choices?

The Texas Legislature included this option in Senate Bill 7 to enable public power entities, along with their members and citizens, to make this decision at the local level.

What is "Public Power"?

Public power is electric service that comes from a community-owned utility or member-owned cooperative. In Central Texas, many rural and suburban areas receive electricity through cooperatives, which were formed in the late 1930s to provide electric power in areas where large electric companies did not want to serve. Many municipalities also offer electric power in their communities. Public power providers traditionally offer lower rates than investor-owned utilities, which must earn profits for the shareholders who own stock in their companies. The communities served by public power entities are their shareholders.

Does Competition mean lower electric bills?

Not necessarily. Investor-owned utilities were required to drop rates by 6 percent on Jan. 1, 2002. New companies and affiliates called Retail Electric Providers also will sell electricity at market prices, which may be higher or lower than the utility’s prices. Some utilities have challenged these Price to Beat guidelines and have sued the Public Utility Commission of Texas (PUC).

Do I have to change electric providers?

No. If your local electric provider does not participate in the competitive market, you don’t need to do anything. If your provider continues to offer electric service, you do not have to change. If your power provider chooses to provide distribution services only and stops selling electricity, another default provider will provide service.

Will I get calls like I do now from long-distance providers?

Maybe. If you live in a competitive area, other retail providers may market their services to your community. If your local utility does not participate in the market, others should not call you, but they may. The PUC has developed a “do not call list” in competitive areas, and you may pay a fee to be included.

Who makes sure I get the power I purchase?

The electric transmission system in Texas still will be regulated and monitored by the PUC. The Electric Reliability Council of Texas (ERCOT) is the Independent System Operator (ISO) responsible for the reliability of most power systems in most of Texas.

How will electric deregulation affect my community?

That depends. Many small towns in Central Texas operate municipally owned utilities, and the funds those utilities earn from electric sales help pay for city services such as road maintenance, police protection, parks and more. Because they own the distribution lines that deliver power to your home, those cities would continue to receive some fees from other electric providers if they choose to allow other providers in their service areas. However, if electric revenues decrease, some cities may turn to other sources, such as increased taxes, to help pay for municipal services. If your municipally owned utility or co-op does not opt in to competition, you probably will notice no change.