Energy deregulation in Texas has been in place for more than 10 years and has given the people of this state and others the power to select their electric company or retail provider. Although the Texas consumer gained some unique benefits from the deregulation of Texas electric companies, particularly in retail distribution, some people are still confused about how the energy deregulation process actually works, particularly in the roles of the companies. utilities and other players in the Texas energy market.

To better understand how energy deregulation actually works, the consumer needs to have a firm understanding of the roles each player plays in the energy marketplace. In its most basic sense, energy deregulation applies only to retail providers, with the manufacturing and transmission component remaining intact and unaffected. Each of the major market elements – generation, transmission and retail, each of which is a separate electric utility in its own right – plays an important role in ensuring that the Texas consumer receives electric power efficiently and reliably.

A historical perspective

During the old days of power grid monopolies and before power deregulation was implemented, a single electric company provided all the components of the utility, from generation to transmission and distribution, and finally to retail. When energy deregulation became institutionalized, it revolutionized the energy market in states like Texas and California, where the system was implemented and created better competition between existing and emerging electric companies.

Energy deregulation has also paved the way for considerably cheap and renewable sources of electricity to enter the energy market, resulting in more choice for consumers, particularly the choice to choose environmentally friendly sources of electrical power. .

The current structure in Texas

The following describes the currently deregulated structure of electric power generation and distribution in Texas and among Texas electric companies:

* Energy generation

These power companies are responsible for the generation of electrical power through various means, including the use of fossil fuels, coal, biomass, hydroelectric, natural gas, nuclear, solar, and wind power. Power generation is not affected by power deregulation, as these power plants produce and sell to retail and distribution electricity providers. These Texas electric companies, particularly the nation’s leading wind power generators, provide a significant portion of the power capacity not only for Texas but for other parts of the United States as well.

* Transmission and distribution

The Texas electric companies responsible for transmission and distribution are called Transmission/Distribution Service Providers or TDSPs. These companies remained after the implementation of energy liberalization, since they continue to have control and maintenance of the electricity transmission infrastructure. TDSPs remain responsible when power lines are down and will provide necessary repair and maintenance should this eventuality occur. The electricity they own can also be sold to retail providers in addition to charging them monthly maintenance service fees.

* Retail Distribution

The Texas electric companies that were directly affected by energy deregulation are the Retail Electricity Providers or REP’s. They are the entities that sell electricity service to consumers, whose accounts can be monitored through the monthly electricity bills sent to them by the REPs. These companies activate or deactivate a particular service and are responsible for communicating directly with end consumers. Energy deregulation spawned the rise of various Retail Electricity Providers that compete for consumer attention through discounts, rate plans, incentives, renewable energy options, and quality of customer service.