Choose Texas power : How the retail electricity supply works & choosing an electric company

Electricity in Texas

Texas leads the way when it comes to states in the retail energy market. Texans maintain the power to choose their electricity and have had the choice since the energy market's deregulation in 2002. With residential supply on the ERCOT grid open to competition, 85% of residential customers in Texas can choose which electric company provides their electricity. Here, you can find everything you need to know about electricity service in Texas - whether you are moving to Texas, building or flipping houses, or just looking to switch electric providers.


How Texas supplies electricity

In the past, all three steps of the electricity service were performed by one company (often called a vertically-integrated monopoly). When the Texas electricity market restructured in 2002, the main functions were split amongst different companies but with ERCOT retaining management of electric power flow to more than 25 million Texas homes and businesses.

Today, electric service works in three main steps:

  1. Generation
  2. Distribution & transmission
  3. Provision of service

For electricity consumers within the ERCOT retail market, there are two main actors involved in delivering electric power supply: the 5 Transmission & Distribution Utility companies (TDUs) and over 70 retail electric providers (REPs).

The utiility companies (TDUs), which are determined by consumer location, are responsible for the generation and distribution of electricity, the limited services to customers they provide include:

  • Setting up the electrical infrastructure to a newly built home or building (power poles/lines, transformers, meters, etc.)
  • Power outage reporting and outage status updates (area and number of customers affected, estimated time for repairs, etc.)
  • Repairing downed power lines or street lights
  • Resolving potential hazards that involve power lines (i.e. tree limb trimming)

REPs, who are chosen by consumers, serve as the direct contact for their customers and assist with:

  • Disconnecting service from a previous REP (if changing REPs)
  • Selecting an electricity plan they offer
  • Starting electric power service - essentially they flip the switch
  • Setting up bill payment and sending the TDU their share of what is paid
  • Finding ways for needy and eligible households to get financial assistance
  • Responding to customer complaints and concerns

Find out more Learn more about the electricity system process in Texas.

How much does electricity cost in Texas?

Texas is the biggest electricity producer (twice more than #2: Florida) and biggest energy consumer out of all the states in the nation (as of spring 2020). As demand balances with supply, check out the Texas averages and the kilowatt-hour cost per square foot of home.

The Texas average: electricity use, price per kWh, bill, household size (sq ft), and electricity cost per sq ft
Average: Use/mo. (kWh) Price (¢/kWh) Bill ($/mo.) Household size (sq ft) Monthly cost per ft²
Texas 1,140 11.76 134.07 2,031 0.07

The averages above give an idea as to what consumers may expect to pay for electricity. The charges on an electricity bill can be split between the REP's and TDU's fees, who have potentially two types of charges each:

Company Energy fee (¢/kWh) Monthly fee ($)
Utility Company (TDU)    
Electric provider (REP)   Determined by REP & plan

Utility companies have two standard charges, regardless of which REP customers choose. The TDU fees are passed on to the electric provider who then charges customers. As of fall/winter 2020, the average TDU energy rate is 4.176¢/kWh and an average monthly fee of $4.70.

Electricity providers have the choice to charge customers a monthly base fee in addition to the electricity rate for energy consumption. A few REPs also charge customers minimum usage fees for not using over a certain amount of energy per month.

In Texas, these charges will be combined into a single price, though if you look at your EFL you will see the cost breakdown. Your retail electric provider collects both costs, but only keeps what you pay for your electricity supply itself. All costs related to transmission and distribution go to your local utility.

Choosing an electric provider (REP) and electricity plan

If you're trying to find a plan for your electricity service in Texas, look no further! We've got plenty of useful tips and comprehensive advice about what to look for when shopping for electricity.

Start off by checking out some of our general guidelines on electricity shopping mistakes to avoid. Continue by learning about the 10 questions to always ask a REP.

Finally, don't forget to brush up on the differences between fixed, variable, and indexed prices for electricity in Texas, so that you can decide which price type is right for you.

As mentioned, there are over 70 retail electric providers to choose from. Choose from the complete list of REPs, compare REP customer reviews, or check out a few of the largest and best-known:

Researching your next electric providerTo help consumers, the Texas government's Public Utilities Commission (PUC) provides:
 the number of formal customer complaints filed against REPs
 a website called powertochoose.org to compare a majority of available plans
For assistance finding a new electric provider and plan, or questions about your current plan, give us a call at 1 (346) 293-7657!

How to set up electricity: Move-in, move-out, and flipping houses

For new Texas residents, the process of setting up and starting an electric service may seem more complicated than other states. The electricity set up is generally the quickest part of the process. What generally takes more time and research is choosing a provider and plan that best suit your needs and preferences.

Moving to a new home in Texas

If you are moving in to a new home in Texas, you do not need to contact the utility company (unless the home is brand new and needs electrical infrastructure installed). Instead, contact your preferred retail provider directly in order to get your electricity service started in time.

Your chosen provider establishes your account number and an identification number that is linked to your electricity meter. They will take care of contacting your local utility company if there is a need to activate the service manually by sending a technician. This operation might take up to 5-7 days, so be sure to contact your chosen REP as soon as you know your address and move-in date to ensure that service is on when you get to your new home.

Flipping houses in Texas and choosing electric providers

Texan cities take up more than 10% of the "top 100 cities" list for house flipping potential! Many house flippers look for the cheapest provider to power a project until the flip closes.

A recommended plan to get electricity to flip a house will NOT have:
 A contract end date - avoid early termination fees (up to $300)
 Minimum usage fees - extra fee or higher rate for low monthly energy use
 Base fees - a monthly cost that REPs choose to charge

The best electricity plan for flipping a house will have:
 Month-to-month timeframe exit the contract when the house sells without being charge an early termination fee
 A REP's energy-use charge, only - pay only for the energy that is used without other random fees
 Same-day electricity set up - get in and start working!

Moving out and need to stop or transfer service?

You will need to call your provider in advance to turn off electric service before you move as they will be responsible for asking your local utility to turn off service at your old home.

If you are signed up to a fixed rate plan with your provider, there may be an early termination fee (depending on your plan). However, many providers waive the early termination fee if you provide documentation that you are moving out. Just make sure to check whether this is the case with your chosen provider and to notify them of an upcoming move within the required amount of notice (usually around 30 days before your move).

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