Texas Electricity Deregulation Explained

Texas deregulated its retail electricity market through Senate Bill 7, signed into law in 1999 and fully implemented by 2002. Deregulation broke the traditional utility monopoly into separate roles: power generation, transmission and distribution, and retail sales.

In a deregulated market, you have the freedom to choose your retail electric provider (REP). REPs compete for your business by offering different rates, contract lengths, and renewable energy options. The physical delivery of electricity remains regulated and is handled by your local TDSP such as Oncor or CenterPoint.

Deregulation applies to areas within the ERCOT grid, which covers about 90% of Texas. Cities like El Paso and portions of the Panhandle remain regulated under separate utilities and do not have retail choice.

The benefits of deregulation include competitive pricing, plan variety, and renewable energy options. Risks include price volatility in variable-rate plans during extreme weather. Shopping regularly and choosing fixed-rate contracts helps Texas consumers capture the best value in the deregulated market.

Compare Electricity Rates by State

Texas Cities

Electricity Providers

Learning Center

Resources & Guides