Electricity Crises

[Expand]

Support Wikipedia: a non-profit project

Donate Now »

[Expand]

Support Wikipedia: a non-profit project — Donate Now

Deregulation of the Texas electricity market

Electricity deregulation in Texas was the result of the coming into force of Texas Senate Bill 7 on January 1, 2002. According to the law, deregulation is to be phased in over several years.

As a result, most Texas power customers can choose their electricity service from a wide variety of "Retail Electric Providers" (or REPs). The "local wires" utility in the area still maintains the power lines, only the companies that buy and sell electricity (REPs) were affected. However, customers served by cooperatives or municipal utilities only have the choice if their utility has "opted in" to deregulation; to date, all but one (Nueces Co-Op) have not.

Since 2002, approximately 85% of commercial and industrial customers in Texas had switched power providers at least once. Approximately 40% of residential customers in deregulated areas of the state have switched from the former incumbent provider to a competitive REP.

Background

The state of Texas is the largest electricity market in the United States; Texas also ranks as the 11th largest worldwide market, falling between Great Britain and Spain in terms of annual consumption.

System

The law designated the Electric Reliability Council of Texas (ERCOT) would have the authority to oversee grid reliability and operations so as to ensure no particular buyer or seller would gain an unfair advantage in the marketplace.

"Aggregators" are legal entities that join together two or more customers for the purpose of purchasing electricity at reduced rates. Although there are almost 200 aggregators registered with the Public Utility Commission, perhaps only 25 or so are still active in terms of acquiring and managing customers.

The "price to beat"

Included within SB7 was a regulated rate concept governing the pricing behavior of the...