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Important Things to Understand About Energy Deregulation in Texas

August 9, 2010

Energy deregulation has been in place at Texas for over a decade now but there are still a lot of people who are confused or who have not fully understand the implications, structure, details and workings of energy deregulation. Many simply know that energy deregulation means people now have the power to choose their Texas electric companies – a diversion from the previous system where a single utility company provides services for the generation, transmission and distribution of Texas electricity.

Despite resistance from some sectors, energy deregulation is seen to have given several benefits to the Texas electricity consumer. Although there is still a long way off before people could truly enjoy really cheap electricity, energy deregulation provides a whole avenue of options ensuring that the people receive reliable and affordable electrical service.

A Little Bit of History

Although the idea has been contemplated years earlier, it was only in 1999 when Senator David Sibley formally introduced into the Texas state legislation the deregulation of electricity rates and finally put an end to the monopolies that controlled the Texas electricity market. Senate Bill 7, as it was officially known, passed through much debacle before it was officially promulgated into law on 1st of January in 2002.

Since then, a significant number of Texas households and businesses switched to different electricity providers in almost all the regions in Texas. Consumers serviced by the several retail electricity providers that emerged after deregulation now has the power to choose which Texas electric company will provide their energy. This new era for a competitive market in this industry has spurred all players to provide better quality services, promos and special offers in a bid to capture an ample share of the market.

The Structure of Electrical Power Generation and Distribution in Texas

In a deregulated Texas electricity market, the consumers purchase their electrical services from Retail Electricity Providers or REPs. These REPs communicate directly with customers and is responsible with coordinating with the local Transmission and Distribution Service Provider or TDSP to ensure that the electrical service is turned on according to the logged order from the consumer. The REPs take care of all customer services including billing and pricing rates, while the TDSPs continue to maintain the transmission wires, poles and other electrical infrastructure.

REPs purchases electrical power wholesale from the power generation companies who make use of different energy sources: coal, natural gas, wind, nuclear energy, biomass and hydroelectricity — to provide power to the households and businesses in Texas. The generation of electricity as well as the transmission and distribution of electrical power is still under the regulation of the Public Utility Commission of the state of Texas.

Things the Public Should Know about Texas Energy Deregulation

There are certain things that the public should know about energy deregulation to clear out any misconceptions or apprehensions that they may have with these services. Most important is the fact that no change will occur to the safe and reliable delivery of electricity to homes and establishments as the same local utility company that handles this continue to be under the regulation of the Public utility Commission. As mentioned earlier, the transmission and distribution utility company is still under regulation and will continue to provide services particularly during times of service interruptions and other maintenance concerns involving wires, pipelines and poles.

With energy deregulation, people can opt to buy electrical power from a different retail electricity provider according to the criteria of their own choosing including pricing rates, quality of services, and special offers. Electrical bills will come from the Retail Electric Providers who are responsible for all customer service activities including answering inquiries and responding to reported concerns or complaints about the services.

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