Busting Myths about Texas Electricity Deregulation

Understanding electricity deregulation can be quite confusing, so we wanted to take some time to bust a few myths about how deregulation works in Texas so that you can be an informed consumer who’s able to take advantage of your power to choose from the available Texas electricity providers.

What is energy deregulation?

This is typically described as the act of removing or reducing the government’s regulation on activity in the energy industry. Furthermore, energy deregulation means providing a larger supply of cleaner, more efficient power plants and giving Texans the power to choose their own Texas electricity providers. Electricity deregulation in Texas also allows for competition, giving consumers more energy choices and lower electric costs.

How does electricity deregulation work in Texas?

The deregulation of electricity in Texas began with the separation of the energy industry into three parts:

  1. The production of electricity at power plants across Texas was deregulated in 1995, allowing power generated by these plants to be sold on the open market.
  2. Also known as the utility company, the Transmission and Distribution Service Providers (TDSPs) are responsible for owning, maintaining, and reading the lines, poles, and meters for a given area. The TDSPs are still regulated and monitored by the Public Utility Commission (PUC) of Texas, ensuring that electricity is delivered efficiently and safely to residential and business customers.
  3. The Retail Electric Providers (REPs), such as Direct Energy, are responsible for selling electricity, generating bills, and providing customer service. Due to electricity deregulation, REPs now compete for your business, which means more competitive pricing and benefits for you.

Want to learn more about deregulation? Check out our handy “Deregulation and You” fact sheet, available in our learning center.