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Retail Electric Choice: What Is It And How Does It Affect You?

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This guide will walk you through everything you need to know about retail electric choice in Texas, why it affects you, and how you can use it to your advantage.

What Is Retail Electric Choice?

Retail electric choice is basically a long-winded term for deregulation.

Deregulation of electricity is essentially the unbundling of large, investor-owned utility companies who, historically, control all three aspects of the electricity market:

Does the term “deregulation” not ring any bells? We’ll break it down for you.

If you’re already familiar, don’t worry, we promise to keep it brief.

Deregulation in Texas was introduced via the passing of Senate Bill 7 back in 2002.

The bill restructured the electricity market, making it so that large investor-owned utilities (IOUs), who previously predominantly provided electricity service to Texans, were faced with little competition.

Enter Retail Electric Providers (REPs).

Before deregulation, large IOUs held a monopoly in the market, and it led to a bit of chaos, including:

Now, due to deregulation, the IOUs still generate electricity, but it is then sold to REPs across Texas, who compete for your business and ultimately sell it to you.

Retail choice of electricity is a big win for you as an energy consumer.

It gives you the ability to:

Deregulation allows Retail Electricity Providers (REPs) to offer various rates, plan types, and different levels of flexibility to consumers like you.

Now, instead of being told who you have to do business with, you have the chance to choose for yourself.

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Which States Have Retail Electric Choice?

A number of states in the U.S. are like Texas.

No, not the great barbecue or the palpable state pride, but alike because they, too, are deregulated.

There are a number of other states with retail electric choices. A few others have deregulated natural gas programs, and some have one but not the other.

A handful has what is called “partial choice” or “limited choice.”

Even fewer have both deregulated electricity and natural gas markets.

Take a look at the following:

Maine, Maryland, and Michigan all have deregulated electricity and natural gas markets.

Minnesota and Mississippi, meanwhile, have no choice in either.

There are currently 17 states and 1 district with a deregulated electricity market.

They are:

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Where Does Retail Electric Choice Exist In Texas?

There are six Transmission and Delivery Utility (TDU) companies servicing the areas of Texas that have a retail electric choices (the deregulated markets):

Most Texas cities have a retail electric choice, but there are some cities and areas in Texas that do not.

The good thing is, three of the largest cities in Texas are deregulated:

When lawmakers deregulated electricity in Texas in 2002, it allowed cities such as San Antonio, Austin, San Marcos, and El Paso — as well as areas served by electric cooperatives — to remain regulated markets with a single provider.

It’s important to note that the regulated areas of Texas account for only about 25% of the land area of Texas. The remaining 75% of the state is deregulated.

What Retail Electric Choice Means For You

But what does that actually mean for you?

In short, retail electric choice means that you have the freedom to choose which REP you want to provide electricity to your Texas home or business.

But, it also has some other perks.

Deregulation:

Pretty sweet, right?

Let’s take a look at how retail electric choice has affected José and Emily:

José currently lives in Dallas, and Emily lives in Austin. The two recently got engaged and decided José would make the move to Austin.

When José lived in Dallas, he chose a REP that offered a free nights and weekends electricity plan.

This worked well with José’s lifestyle since he often spent a lot of time FaceTiming Emily after work and hosting get-togethers when Emily was in town every other weekend.

Recently, they have been researching neighborhoods and different houses in Austin, so José thought he would start looking into his options for their new REP.

After all, that’s one of the perks of retail electric choice, right?

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Unfortunately, not in this case.

Austin isn’t a deregulated Texas city, so José and Emily don’t have a choice about who they want to provide their electricity.

So, how do deregulated areas work? We’ll explain in the next section.

How Do Areas That Don’t Have Retail Electric Choice Manage Electricity?

Unfortunately, not all Texas residents are able to benefit from deregulation.

Consumers who live in areas of Texas that are served by investor-owned utilities outside of ERCOT management are not eligible to participate in retail electric choice.

On top of that, municipal and cooperative utility companies (meaning not investor-owned) can opt out of the retail electric choice program in Texas.

Consumers living in these areas don’t have the freedom to choose their electric provider.

So what do they do?

Let’s look at José and Emily again:

Remember, Austin is a regulated city, meaning José and Emily don’t have the option to choose what company they want to buy their electricity from.

Austin Energy has been operating for nearly 125 years.

Because they are a public-owned utility company, they are exempt from deregulation. Austin Energy is the sole electricity provider in the Austin area.

Because there is no electric choice available in Austin, José and Emily and their fellow Austinites must purchase their electricity directly from Austin Energy.

The Austin City Council sets rates and terms and conditions of service.

Rates for all Austin Energy residential electric customers are currently (as of April 2020) set at 7.814 cents/kWh for usage above 1,000 kWh.

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What Is A Retail Electric Provider?

A Retail Electric Provider (REP) sells electric energy to retail customers in the areas of Texas where the sale of electricity is open to retail competition (thanks to retail electric choice).

A REP buys wholesale electricity, delivery service, and related services.

They then price that electricity for customers, and because the electricity market is so competitive, they market that electricity to customers, often using promotional incentives.

You, as the customer, then complete the cycle when you sign up for and buy electricity from the REP.

How Retail Electric Providers Operate

A REP has many responsibilities, including:

Your monthly bill can be broken up into two sections:

T&D charges cover the maintenance and upgrading of the poles and wires that bring electricity to your home or business, while the supply portion of your bill covers the actual energy you buy and use.

Depending on where you live in Texas, you may still receive just one bill from your utility or two separate bills, one for T&D from your utility and one for supply from your REP.

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How Retail Electric Providers Get Electricity

If you live in an area of Texas with a retail electric choice, it means you can get your energy supplied by a REP rather than the utility.

If you take advantage of retail electric choice, your chosen REP, rather than the utility, is responsible for buying electricity from power plants and getting it to your utility.

The utility will handle all other services like distribution and maintenance.

Electric power transmission is the bulk movement of electrical energy from a generating site, such as a power plant, to local utilities.

The interconnected lines that make this happen are called a transmission networks. The transmission lines carry high voltages, which are too dangerous to use in your home.

Once the high voltage electricity reaches the utility, it is converted to a lower, safer voltage to make it okay to use in homes like yours.

The utility transports this lower voltage electricity to homes through distribution lines, which travel shorter distances than transmission lines.

How Retail Electric Providers Sell Electricity to Consumers

REPs often compete for customers by offering:

In 2012, a J.D. Power study found that Texas customers in competitive markets are increasingly more satisfied than those who don’t have retail electric choices.

Texas Retail Choice: How To Choose the Best Retail Electric Provider

Think about all the times you ask the people closest to you for advice — It doesn’t have to be for anything big.

  1. When trying a new restaurant, you may ask, “What are you ordering?
  2. Or, at the nail salon, you could turn to a friend and say, “What color are you getting?
  3. Or, at the hardware store, you ask an employee, “What do you think of this product?

You might be thinking of doing the same when choosing an REP.

To research REPs in your area, you could:

You have many choices when you pick which electric company to work with.

And you have almost as many choices when deciding how to choose the best REP in your area.

But here’s the secret:

The key to finding the right retail electric provider for you is knowing that “the best” REP (or even plan/rate for that matter) will depend on you and your family’s specific circumstances and unique energy needs.

In order to narrow the options down to one electric company, you ultimately have two choices: the hard way or the easy way.

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Option 1: Use All Of Your Free Time Manually Researching Available Providers

Your time is valuable.

And doing a manual search can quickly take up a lot of your spare time.

Chances are, you’ll find yourself frustrated, exhausted, and confused.

If you’re trying to find the “best” REP manually, be prepared to:

Compile A Complete List Of Electricity Plans Offered By The REPs In Your Area

Got your coffee by your side?

Start by Googling all of the available REPs in your area. There could be tens of different options available (thanks, retail electric choice).

To find and compile a list of all of the plans they each offer, you can:

Determine Your Electricity Needs

This might be the most important part of your search.

It will help you narrow down and ultimately decide which REP and plan best fits your unique energy needs.

In order to truly find the REP that will save you, your family or your business money in the long run, you’ll need to keep these factors in mind:

You need to look at the specific ways you and your family or business use electricity to choose the type of plan that will meet your needs.

Compare Each and Every Plan Available To Match To Your Electricity Needs

Once you have determined your unique answers to the factors above, you are prepared to compare every single plan available to you.

But how?

Unless you enlist your whole family to help compare every aspect of a plan (i.e. your rate per kWh, contract length, any bonuses that come with the plans, fees, and more), you are likely not going to be able to settle on the right plan before the rates change again.

And are you sure that picking a REP and plan is something you want to just take a guess on?

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The type of plan you choose will affect:

Seems like a pretty big decision.

Pick A Plan, Enroll, and Monitor The Market For The Rest Of Your Life

Let’s say you do choose a plan.

Chances are, it’s probably not the best for you simply because there are so many factors to consider that it is not humanly possible.

Unless you plan to designate one Saturday every month for electricity research, this option just isn’t sustainable.

Having a retail electric choice is a great thing for you as a consumer.

Don’t let the manual research ruin that for you.

Let us free up your Saturdays.

Option 2: Save Time (and A Headache) and Find The Best Plan For You With Unbiased Technology

The manual way to search for, find, and sign up with a REP is time-consuming.

It’s confusing. It’s annoying. It’s downright frustrating and exhausting.

Feeling overwhelmed? We don’t blame you.

When you’re ready to put away your extensive list and pull out a celebratory cocktail (because the work is done), let us introduce you to Power Wizard’s Shopping Tool.

All you have to do is enter:

Power Wizard’s Shopping Tool will compare all of the plans available in your area and give you the best overall option.

The best part? It takes less than five minutes.

It doesn’t even stop there.

Being a Power Wizard member means that not only will we find a great plan for you, but we’ll also:

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How To Change Electric Companies In Texas

You’ll need to:

A lot of the time, after your initial contract is up, electricity providers will automatically switch customers over to a month-to-month plan.

If the penalty is only $25, it might be in your best interest to switch plans if you anticipate saving $10 per month.

Now, you can use your retail electric choice and start to shop around for another plan and rate.

But if you think the process of changing electric companies in Texas is any easier than researching for and signing up for one, you’d be sorely mistaken.

The good news is that Power Wizard continues to do all the work for you.

Power Wizard uses its unbiased algorithm to monitor your electricity usage and all of the electricity plans that are on or that come onto the market 24 hours a day.

If your electricity usage changes, or if a better plan comes on the market that better fits your needs, Power Wizard lets you know and helps you switch plans.

Power Wizard ensures that you always have the plan that best fits your energy needs.

Complete List of Cities in Texas with Retail Electric Choice

Abilene Devine Lacy Lakeview Richmond
Addison Diboll Ladonia Rio Grande City
Alamo Dickens Laguna Park Rio Hondo
Albany Dickinson Lajitas Riviera
Aledo Dilley Lake Jackson Riviera Beach
Alice Donna Lake Whitney Roanoke
Allen Dublin Lake Worth Robert Lee
Alpine Dumas Lamesa Rockdale
Alvarado Duncanville Lancaster Rockport
Alvin Eagle Lake Laredo Rocksprings
Alvord Eagle Pass League City Rockwall
Andrews Early Leakey Roma
Angleton Eastland Leona Rosenberg
Anson Eden Lewisville Rotan
Aransas Pass Edgewood Lindale Round Rock
Archer City Edinburg Liverpool Round Top
Argyle Edna Log Cabin Rowlett
Arlington Edom Los Fresnos Royse City
Arroyo City Egypt Lufkin Ruidosa
Aspermont El Campo Lytle Rule
Athens Eldorado Mabank Sabinal
Atlanta Electra Magnolia Saginaw
Aubrey Elgin Malakoff Saint Jo
Austwell Ennis Malone Salado
Azle Escobares Manor San Angelo
Bacliff Etoile Mansfield San Benito
Baird Euless Marfa San Juan
Balch Springs Eustace Mathis San Leon
Ballinger Falcon Heights Mc Allen Sandia
Balmorhea Falfurrias Mc Gregor Santa Anna
Barksdale Farmers Branch Mc Kinney Sargent
Bay City Flint Memphis Seabrook
Baytown Flo Menard Seadrift
Bedford Forest Hill Mercedes Seagoville
Beeville Forney Merkel Sealy
Bellaire Fort Davis Mesquite Seguin
Bellmead Fort Stockton Midland Shamrock
Belton Fort Worth Midlothian Sheffield
Benbrook Freeport Milano Sherman
Big Lake Freer Milford Sinton
Big Spring Frisco Mineral Wells Snyder
Bishop Fulton Mission Sonora
Blooming Grove Gainesville Monahans South Houston
Bonham Galena Park Muenster South Padre Island
Booker Galveston Munday Spearman
Brackettville Gatesville Nacogdoches Spring
Brazoria George West Nassau Bay Springtown
Breckenridge Goliad Neches Spur
Bronte Graford Nocona Stafford
Brookshire Graham North Richland Hills Stamford
Brownwood Granbury Northlake Stephenville
Buffalo Grand Prairie Odem Sugar Land
Burkburnett Grandview Odessa Sulphur Springs
Burleson Grapevine Olney Surfside Beach
Cameron Gun Barrel City Orange Grove Sweetwater
Canton Hallettsville Ozona Synder
Carrizo Springs Haltom City Paducah Taft
Carrollton Hamilton Paint Rock Taylor
Cedar Hill Hamlin Palacios Temple
Cedar Park Harker Heights Palestine Terlingua
Centerville Harlingen Palmer Terrell
Channelview Haskell Palmview Texas City
Childress Hebbronville Paris The Colony
Christoval Henrietta Pasadena Three Rivers
Cisco Hidalgo Pearland Throckmorton
Clarendon Hillsboro Pearsall Tivoli
Clarksville Hitchcock Pecos Tomball
Cleburne Houston Penitas Tuleta
Clifton Hubbard Perryton Tyler
Clute Hudson Pharr Uvalde
Clyde Humble Pilot Point Van
Collinsville Huntington Plano Van Alstyne
Colorado City Hurst Pleasanton Vernon
Columbus Hutchins Port Aransas Victoria
Comanche Ingleside Port Isabel Waco
Commerce Iraan Port Lavaca Waxahachie
Comstock Irving Port Mansfield Webster
Cooper Italy Port O Connor Wellington
Coppell Jacksboro Portland Weslaco
Copperas Cove Jersey Village Pottsboro West Columbia
Corpus Christi Jewett Praire View West Tawakoni
Corsicana Johnson City Premont Westlake
Cotulla Jourdanton Presidio Wharton
Crane Junction Quanah White Settlement
Crockett Karnes City Quinlan Whitewright
Crosby Katy Quintana Whitney
Cross Plains Kaufman Rachel Wichita Falls
Crossroads Keene Rainbow Wills Point
Crowell Keller Rancho Viejo Wimberley
Crystal City Kemah Ranger Winters
Cypress Kenedy Rankin Wolfe City
Dallas Kermit Raymondville Woodway
De Leon Killeen Red Oak Yantis
De Soto Kingsville Refugio Yorktown
Decatur Knox City Reklaw Zapata
Deer Park La Feria Richardson Zavalla
Del Rio La Marque Richland
Denison La Porte Richland Hills

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