Deregulation in the state of Texas has brought with it a unique opportunity for consumers. Prior to 2002, energy consumers in Texas could only get electricity from one place: their local utility. While it may seem convenient to just have a single place to buy electricity from, it goes against the free market which our country has worked hard to preserve. In a free market, the people have choices and can buy all sorts of products, including energy from different places for competitive prices.
Post deregulation, the markets were opened up to retail energy providers, or REPs, that would purchase shares of electricity from generation facilities, then sell the electricity to consumers, both residential and commercial. The utility still plays a role, but it is to transmit electricity and maintain the transmission lines. No longer do they sell the electricity to consumers directly.
The REPs have populated the state at a quickly and steadily growing rate, seeming to pop up everywhere in recent years. The function of each REP remains constant: buy shares from the generation facility, sell it to consumers in packages or products. The product --- that is, an electricity plan --- can vary quite a bit among REPs, however. REPs may offer just a few plans, or they may offer a dozen. It all depends on the type of electricity they have access to, what their share costs are, and how the market changes.
There are three major components to electricity plans: price, contract length, and energy type. The contract length determines how long the rate stays constant for the consumer. A variable or prepaid plan is a month to month plan with no contract. You can switch at any time from these plans without incurring a penalty, but while continuing it, you are at the whim of the energy market. Any deviation in market conditions will affect your rate, causing it to rise or fall, with no guarantee of how it will affect you before your next bill.
Plans that have a contract last between three months and three years, depending on your provider. When you choose one of these fixed rate plans, your rate will not change, no matter how much the energy market is impacted. If you can lock in a very low rate with a long contract, you’ll be set for a good long while as month to month plans and new contracts continue to rise. The only things that could potentially affect your rate would be new legislation or changes in distribution methods and costs.
When it comes to energy type, all electricity is the same. So how is it different? The difference comes from the source. Renewable energy comes from green sources like wind or solar. Nonrenewable energy comes from sources like coal or natural gas. The electricity works the same coming from each, but renewable energy will be more plentiful and won’t deplete like nonrenewable will. It is also much cleaner and better for the environment. Beyond that, since all electricity is the same, no matter where it’s sourced from or who sells it to you, there’s no reason not to look for a cheaper plan.
The Electricity Reliability Council of Texas (ERCOT) ensures that all energy is treated equally and fairly. Utilities cannot charge you extra because you no longer purchase electricity from them, nor can they affect how reliable your service is. Don’t be fooled by any company who charges a high rate with the promise of more reliable service.