At the beginning of 2002, the Texas state legislature chose to deregulate its electricity industry. This deregulation opened everything up to the competition. This meant any company could now supply electricity to homeowners and business owners in Texas. How does this affect you, though? You have lived in the regulated energy market for so long, so why did it all of a sudden change?
Regulation of Electricity
Before 1975, Texas cities regulated their own electric utility rates and services. However, in 1975, things changed, and the Texas legislature chose to enact PURA (Public Utility Regulatory Act). This act gave the state more power to regulate various aspects of the service and rates for its electric utilities. Howerver, Texas cities still controlled their prices.
Congress passed the US Fuel Use Act in 1978 to handle the crisis surrounding gas and oil. Utilities had to stop using natural gas within industrial boilers and power plants through the act. Now, they used coal and nuclear power. This shift in the type of fuel consumption meant more capacity to generate fuel in Texas.
Texas’ Deregulated Electricity
The Texas Senate passed Bill 373 in 1995. This bill focused on various meaningful changes in the electricity market and primarily affected the ERCOT (Electric Reliability Council of Texas), formed in 1970. ERCOT is the leading organization responsible for helping to manage electricity flow to most of the customers in the Texas electric grid. It also helps control the regulations for Texas utilities.
Bill 373 Changes
• Utilities had to give independent energy companies proper access to the right transmission capabilities to provide full support for the market.
• The utilities also had to acknowledge unregulated, new entities and participants within the wholesale market. These included exempt wholesale generators and power marketers.
• Utilities now had to provide non-utility wholesale entities the right to offer prices based on the market.
• Rates that were regulated by the Public Utility Commission for Texas had to be deregulated for the electric cooperative.
Senate Bill Number 7
Moving Texas to a deregulated, wholesale market failed at first. However, the state kept trying, and its effort paid off in 1999. Senate Bill 7 finally passed, and it forced ERCOT to create appropriate competition for the retail electricity industry. The idea called Price to Beat drove Senate Bill 7. This idea established the thought of regulated rates, which helped control how utilities could price their electricity. The biggest concern for establishing a deregulated market was that the established energy providers had to undersell to reduce the risk of losing out to newer retail energy providers. Therefore, people hoped the new bill might prevent this because it provided a price floor. It allowed new to charge lower rates than the Price to Beat, and existing providers had rates that were at or over the Price to Beat. True Service Connect can assist you in sorting through the options.
How It’s Different
Texas is now completely deregulated. Therefore, customers set up their utilities and pick a competitive REP (Retail Energy Provider). The PUC (Public Utility Commission)regulates transmission providers, but not REPs. Customers receive charges according to the market price. Therefore, Texas residents must pick their electricity provider. This allows you to always move to cheaper prices when they become available.