Texas Electricity Provider Types

Texas Electricity Glossary

Not all Texas electricity providers are the same. Whether you can choose your provider depends on whether you live in the deregulated ERCOT market or in a co-op or municipal utility territory. Understanding the types of electricity providers in Texas clarifies who serves you, who regulates them, and what options are available for your address.

See also: REP · TDU · Deregulated Electricity · PUCT · POLR

Retail Electric Provider (REP)

A company licensed by PUCT to sell electricity directly to residential and commercial customers in the deregulated ERCOT market. REPs compete for customers by offering different rate structures, contract terms, and plan features. There are 100+ active licensed REPs in Texas. REPs do not own the transmission or distribution infrastructure — they source electricity in the wholesale market and resell it to consumers.

Transmission and Distribution Utility (TDU)

The regulated monopoly that owns and operates the physical wires, poles, substations, and meters in a geographic area. TDUs are not competitive — customers cannot choose their TDU. Texas TDUs include Oncor (Dallas/Fort Worth), CenterPoint Energy (Houston), AEP Texas (West/Central Texas), and TNMP (smaller areas). TDU delivery charges appear on every Texas electricity bill.

Electric Cooperative (Co-op)

A member-owned nonprofit utility that provides electricity to rural and suburban areas not served by investor-owned utilities. Texas co-ops (such as Pedernales Electric, Bluebonnet Electric) are typically outside the deregulated ERCOT market — customers in co-op territories cannot choose a REP and do not have the same shopping options as ERCOT residential customers. Co-ops are regulated by their member boards, not PUCT.

Municipal Utility (MUD / MU)

A city-owned electric utility serving customers within municipal boundaries. Major Texas cities with municipal utilities include Austin (Austin Energy), San Antonio (CPS Energy), and Denton (Denton Municipal Electric). Municipal utility customers are generally not in the deregulated ERCOT retail market — they receive service from the city at PUCT-approved rates and cannot choose an alternative REP.

Investor-Owned Utility (IOU)

A for-profit utility company owned by private shareholders and regulated by a state commission. Texas IOUs — primarily Oncor, CenterPoint, AEP Texas, and TNMP — operate as TDUs in the deregulated market: they own the wires but are prohibited from selling retail electricity in competitive areas. They earn regulated returns set by PUCT rate cases.

Generation Company (GenCo)

A company that owns and operates power plants and sells electricity into the wholesale ERCOT market. Generation companies may be independent (selling only in the wholesale market) or vertically integrated with REP affiliates. In the deregulated Texas market, generation is a competitive function — generators compete on price in the day-ahead and real-time wholesale markets.

Affiliated REP

A retail electric provider that is owned by or affiliated with a generation company or TDU parent corporation. Under Texas deregulation rules, affiliated REPs must maintain structural separation from the TDU to prevent cross-subsidization and competitive advantage. Customers often do not know if their REP is affiliated — this is disclosed in the company's PUCT registration.

Electricity Broker

An independent agent or company that helps commercial and industrial customers find and negotiate electricity contracts with REPs. Brokers are paid commissions by REPs — which may influence their recommendations. Residential customers rarely use brokers (comparison websites serve the same function for households), but large commercial customers often engage brokers for contract negotiation.

Energy Service Company (ESCo)

A company that provides comprehensive energy management services — including efficiency audits, lighting upgrades, HVAC improvements, and sometimes power procurement — typically under a performance contract. ESCos guarantee energy savings and are paid from the resulting cost reductions. Most ESCo business is with commercial and institutional clients, not residential customers.

Aggregator

An entity that pools the electricity load of multiple small customers (residential, small commercial) to negotiate bulk pricing or demand response participation as a group. Aggregators can give small customers access to wholesale-adjacent pricing or demand response revenue streams not otherwise available. Aggregation is more common in commercial markets but emerging in Texas residential demand response programs.

Provider of Last Resort (POLR)

A REP designated by PUCT to serve customers who cannot obtain service from a competitive REP — for example, when their provider exits the market or goes bankrupt. POLR service is available in all deregulated areas and typically carries higher rates. PUCT rotates POLR designations among qualified REPs. Customers should switch to a competitive plan as quickly as possible if placed on POLR service.

Default Provider

The REP assigned to serve a customer who has not chosen a competitive provider — for example, a new construction property or a customer whose REP has exited. Default service may be the POLR or a transitional rate. PUCT rules require the default provider to notify customers of their right to shop for a competitive plan. Default rates are typically higher than market alternatives.

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