How does the Texas electricity market work?

Wind Farm

Texans have a choice of electricity providers. Historically, only one utility provided electricity in a given area at a time, but since the Texas Legislature restructured the retail electricity market in 2002 it’s been possible for many Texans to shop for the kind of electric company they want  About 60 percent of Texas residents have chosen a provider in the competitive market. In anticipation of the start of retail electricity competition, Green Mountain moved our headquarters to Texas from Vermont in 2000 to be closer to our customers.

Utilities owned by cities and rural cooperatives are allowed – but not required – to join the competitive market, so in some areas one utility still handles all three parts of providing electricity: generation, delivery, and customer support, including billing. In markets open to competition, however, those activities are split between different entities.

And that means lots of options for who supplies your electricity: more than 40 private suppliers (known as Retail Electric Providers or REPs) operate in Texas.  REPs like Green Mountain Energy buy wholesale electricity from generation companies and sell it to homes and businesses in the areas of Texas that are open to competition.  The delivery of electricity remains a regulated monopoly because there’s only one set of poles and wires. That means when you enroll with Green Mountain or another REP, a single Transmission and Distribution Service Provider (or TDSP) maintains the poles and wires, handles service outages, and reads your meter.

In addition to buying electricity on your behalf, REPs in Texas also handle billing and payment, set prices, provide customer service, and sometimes offer choices of renewable energy,like Green Mountain’s Pollution Free™ electricity made from 100% clean, renewable wind energy. Green Mountain is built around the idea that customers who are able to choose their electricity supplier might want to choose renewable electricity from sources such as solar and wind. (Hence our mission: to use the power of consumer choice to change the way power is made.) In addition to Texas, Green Mountain serves customers in the competitive markets of Illinois, Maryland, New Jersey (commercial customers only), New York, and Pennsylvania.

REPs often compete for customers by offering more choices and lower prices, and paying more attention to customer satisfaction. In 2012, a J.D. Power study found that Texas customers in competitive markets are increasingly more satisfied than those who don’t have a choice.  And in 2014, Green Mountain Energy was ranked “Highest in Customer Satisfaction for Residential Retail Electric Providers in Texas” by J.D. Power.

For more information about the Texas electricity market, visit http://www.powertochoose.org/en-us/Content/Resource/Shopping-Process.