The Texas State Legislature opened up the state’s electricity market to competition that allows Texans the choice of their electricity supplier. Choose from more than 125 electricity suppliers in the Lone Star State, each offering opportunities for the lowest kilowatt-hour rates and a variety of energy plans to compare.
See the lowest rates available today for your location on the deregulated energy market.
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Energy in the Lone Star State is delivered through a complex system of utilities, TDUs, co-ops and REPs that work together to get electricity from power plants to your front door.
ERCOT is a nonprofit that manages Texas’s electricity grid, called the Texas Interconnection. It’s the electric power grid operator for 90% of the state — serving some 26 million customers. Overseen by the Texas Legislature, its members include residential customers, co-ops, retail electric providers and transmission and distribution utilities.
PUCT is a state agency that regulates many of the utilities offered to Texans, including electricity. Managing ERCOT, it’s involved in how electricity is generated, supplied and delivered to homes and businesses in the state. It also mediates issues among customers, utility companies and retail electricity providers — or REPs.
Electric utilities generate and deliver the electricity that powers homes and businesses. Each of the TDUs in Texas covers a specific territory.
| Transmission and distribution utility | Assigned territory |
|---|---|
| CenterPoint | Houston metro area
|
| Oncor Electric Utility Company | Central and West Texas
|
| Sharyland Utilities | South Texas |
| Texas–New Mexico Power Company | North-Central Texas Gulf Coast Texas West Texas |
| AEP Texas | Central Division North Division |
Established in 1941, Texas Electric Cooperatives today represents more than 75 electric cooperatives that deliver electricity to the homes of more than 3 million members statewide. It lobbies for the interests of co-ops and manages utility supplies and services.
More than 125 REPs in Texas buy electricity wholesale and transmit and deliver it to homes and businesses in the state, among them:
Most REPs in Texas offer renewable or clean energy plans that come from natural sources or replenished processes, like wind, hydro or solar energy.
Related: What is deregulated energy?
Finding the lowest electricity rates in Texas requires comparing retail electric providers and energy plans to find the best fit to power your home or business. But first, you’ll want to know your average electricity use.
Get the cheapest quotes on your electricity provider
Enter your ZIP code to see electricity providers near you.
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Power to Choose is the state-operated energy shopping website managed by the Public Utility Commission of Texas. While it’s advertised as an easy way to compare plans, customers online complain that providers hide actual rates behind misleading listings and confusing math to entice signups.
The big state of Texas is home to a handful of big cities to match — each with a healthy deregulated market.
Areas in which co-ops operate do not offer electric choice, including cities like:
You have many independent electricity suppliers to choose from in Texas, each offering different rates and energy plans. Factors to weigh when researching your options come down to rates and the type of plan that fits your electricity needs and budget.
Providers in Texas offer the choice of fixed, variable or hybrid kWh rates:
For variable rates, ask your potential provider if it limits how much rates can fluctuate, which can help you keep costs manageable.
Many suppliers and providers offer lower advertised rates or bonuses to entice new customers. These bonuses can be reflected as a lump-sum savings or percentage knocked off the standard rate.
Introductory rates can last the first quarter of your contract, for six months or even the full term. Read the fine print of any offer to understand the rate you’ll pay after the bonus and avoid overpaying for your energy in the long term.
Understand the contract system of any supplier you’re interested in. Look at available terms, how the supplier handles renewals and whether you can cancel before your contract ends.
Your electricity bills include home energy costs that can vary by utility provider or supplier.
If you choose an alternative energy option, your energy bill may include fees associated with the renewables you choose.
After you’ve found an electricity provider that fits your energy needs, gather up a current monthly bill and get ready for the big switch.
Texas law allows you to take on a new contract without an early termination fee if you switch within 14 days before your old contract’s expiration date.
Energy suppliers in the Lone Star State highlight the financial benefits of electricity choice, further advertising the benefits to the environment through renewable energy.
Results of deregulation are mixed, and there’s research to suggest that doesn’t lead to the savings it promises over the regulated market. There’s also the potential for suppliers to lure customers into plans without transparency around the risks.
Senate Bill 7 became law in 1999, calling for the “establishment of a fully competitive electric power industry.” That green light resulted in full deregulation of Texas’s electricity market by January 2022, becoming the only state with its own stand-alone electricity grid.
But reorganizing how homes and businesses are powered hasn’t been easy for the second-largest state in the union.
It’s hard to talk about Texas and electricity without name-checking Enron. The energy company was an influential part of the state’s early conversations to deregulate the energy market.
Ultimately, Enron was subject to the very competition that deregulation promised, and the company began relying on opaque accounting to hide significant drops in revenue. Those dubious business practices became public in early 2001, and the outrage pushed Enron to file for bankruptcy in December 2001 — the largest Chapter 11 case in the history of the US. The scandal left 4,000 employees without jobs and retirement.
Texas was hit with three severe storms in February 2001 that triggered a deep freeze and the failure of the state’s energy infrastructure, leaving 4.5 million homes — an estimated 10 million people — without heat and power. Experts are trying to break down what happened even a year later, though some have blamed the crisis on a chaotic deregulated market in which there isn’t one agency or company that owns how electricity and natural gas is generated, transmitted or distributed.
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