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Deregulated Electricity — Texas

Texas Electricity Glossary

Deregulated electricity means you can choose your retail electric provider rather than buying from a single monopoly utility. Texas deregulated most of its electricity market in 2002 under Senate Bill 7, creating a competitive market within the ERCOT grid. About 85% of Texas — including Houston, Dallas, Fort Worth, and most of the state — operates in this deregulated market, where more than 60 REPs compete for your business.

How Texas Electricity Deregulation Works

Before deregulation, Texas utilities were vertically integrated — they generated power, owned the transmission lines, and sold directly to customers. Senate Bill 7 (SB 7) split these functions. Generation became competitive. Retail sales became competitive. But the physical delivery infrastructure — poles, wires, transformers — remained regulated monopolies called TDUs.

Today, when you choose an electricity plan, you are choosing a REP (the company that sells you electricity). Your TDU (Oncor, CenterPoint, AEP Texas, or TNMP) still delivers electricity through its wires and sends meter data to your REP. You cannot choose your TDU, but you can switch REPs as often as your contract allows.

Deregulated vs. Non-Deregulated Areas in Texas

Area Status Why
Houston, Dallas, Fort Worth, Corpus Christi, Lubbock, Midland…DeregulatedOn ERCOT grid; SB 7 applied
AustinNot deregulatedAustin Energy is a municipal utility that opted out
San AntonioNot deregulatedCPS Energy is a city-owned utility that opted out
El PasoNot deregulatedOn the Western Interconnection, not ERCOT; El Paso Electric
Round Rock, Pflugerville, Cedar ParkDeregulatedServed by Oncor despite proximity to Austin

What Deregulation Means for Your Bill

In a deregulated market, REPs compete on the energy charge portion of your bill. The TDU delivery charge is the same regardless of which REP you choose — it is a regulated pass-through. So when comparing plans, focus on the total cost (energy + TDU), not just the advertised per-kWh rate.

TexasPowerCost.com calculates both components — energy cost using linear interpolation across the EFL price points, and TDU delivery charges — to give you a complete monthly cost estimate for any Texas ZIP code.

Related Terms

Frequently Asked Questions

Is my city deregulated for electricity?

Most Texas cities served by the ERCOT grid are deregulated — including Houston, Dallas, Fort Worth, Arlington, Corpus Christi, Lubbock, Midland, Abilene, and hundreds of others. Austin and San Antonio are notable exceptions: Austin Energy and CPS Energy are municipal utilities that opted out of deregulation, so residents there cannot choose their provider. El Paso is also non-deregulated, served by El Paso Electric on the Western Interconnection.

What is the benefit of electricity deregulation?

Deregulation creates competition among retail electric providers, which can lower prices and drive innovation in plan types (free nights, prepaid, renewable plans). Consumers can switch providers to find better rates. The downside is that variable-rate plans expose consumers to wholesale market volatility — as demonstrated by Winter Storm Uri in February 2021.

How do I know if I can choose my electricity provider?

Enter your ZIP code on TexasPowerCost.com or powertochoose.org. If multiple plans from different providers appear, your area is deregulated. If you see only one utility or a message that your area is not in a competitive market, you are in a regulated or municipal service territory.

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