Choosing the best electricity plan in Texas can be a daunting task, especially if you are new to the state. Thanks to its deregulated market, there are hundreds of retailers and providers to choose from. Each offers unique services. This article simplifies the process of choosing a retailer so you can make the right decision.
What Does Deregulation in Texas Mean?
Before 2002, utility companies generated and distributed electricity. When deregulation took place in 2002, the regulators separated generation function from transmission and distribution. While transmission and distribution was left as it were, generation was decentralized, paving way for competition.
Companies can now offer electricity at competitive prices. The lower the cost of supplying, the more the customers. Unlike other states, Texas offers the most competitive market, allowing competition on the wholesale and retail levels. Other states with similar restructuring offer competition at the wholesale level.
Thanks to this competitive market, customers have a wide range of choices. In fact, one can go online and find different electricity suppliers offering their services at a competitive price. It also helps the utility companies to operate at a profitable margin as the cost of generation is lower.
To ensure sanity in the marketplace, the Public Utility Commision of Texas oversees the Electric Reliability Council of Texas, which manages electric power transmission infrastructure, the wholesale electricity market, and capacity building of the infrastructure.
ERCOT serves 90% of the Texas grid as of writing and helps regulate supply and demand. For example, if a generator wants to inject more electric power and it might cause overloading, ERCOT has the right to make adjustments to mitigate the overloading phase. It is also mandated to determine how much infrastructure is needed for uninterrupted power supply.
Thanks to ERCOT, the Texas grid system can operate outside the federal jurisdiction. It means Texas’s energy market operates only with state supervision rather than relying on the Federal Energy Regulatory Commission.
This has also helped mitigate state and federal-level conflict of interest, which is rampant in other states. With Texas operating on its own, it has helped bring sanity to the market while fostering a competitive atmosphere, which has benefited residential and commercial customers.
What’s the Difference Between a Distribution Utility and a Retailer?
While the Texas energy market is deregulated, you cannot change the utility company at will. That said, you can easily choose between energy plans with the utility company supplying electricity to you.
Who is a Distribution Utility?
A distribution utility or utility company owns the distribution and transmission of the electricity. Think of poles, cables, meters, and wires. They are the people to turn to if your electricity malfunctions or if a tree falls on the power cables. So, a distribution utility owns much of the electricity infrastructure that brings electricity to your home.
Who is a Retailer or Supplier?
In Texas, the terms retailer and supplier are used interchangeably but mean the same thing. A retailer or supplier is the one who owns electricity as a commodity. Most will buy electricity from a generation source such as hydro, wind, or solar.
They are generally termed as the middlemen as they buy electricity in wholesale sales and resell it to customers. Unlike distribution utility, you can change retailers based on your energy needs. For example, if you want green energy, you can choose a retailer that buys electricity from solar or wind generation.
What are Investor-Owned Utilities?
As the name suggests, these and publicly traded utility companies often answer to their shareholders. There are several investor-owned utilities such as Oncor, AEP Texas North, and AEP Texas Central.
What are Municipally Owned Utilities?
These are utilities owned and operated by the city. They do not offer energy choices compared to investor-owned utilities. They often supply electricity in a small area. Popular municipally owned utilities include Austin Energy, Bastrop Electric Dept., CPS Energy, and Lubbock Power & Light.
Which Electricity Plans Can You Find in Texas?
Here are the most popular electric plans offered in Texas.
Fixed-rate Electric Plans
As the name suggests, these plans have a fixed price for a set period of time. For example, most plans will stay the same for 12 to 36 months. The chief benefit of a fixed-rate plan is that you can have a predictable bill. Besides, you will not be affected by fluctuating electric prices.
The downside is that the price will remain the same even if electric rates decrease. Your monthly energy consumption is what will affect your electric bill. So if you want predictability, consider choosing a fixed-rate plan.
Variable-rate Electric Plans
These plans are based on current electric rates on the market. If the rates increase, so will your electic bill and vice versa. A chief benefit of variable-rate electric plan is you can take advantage of the lower rates. Besides, you can change to another plan since the contract is non binding.
Prepaid Electric Plans
Also known as the no-deposit plan, you pay for your electricity in advance. There are many benefits of using the prepaid electric plan, one of them being paying a lower deposit. While most Texas electric retailers will ask for a deposit, those that offer prepaid electric plans overlook this step.
With a prepaid plan, you can enjoy uninterrupted electricity without affecting the retailer. That said, prepaid plans have higher rates per kilowatt-hour.
Renewable Energy Plans
If you want to go green, choosing a renewable energy plan is your best bet. Most renewable energy plans are however more expensive than conventional plans. Also consider their source of electricity, most might advertise as renewable but are sourcing from non-renewable sources.
Other plans you can choose include EV incentive and solar buyback plans.
How do you Choose the Best Electricity Rates?
When in Texas, always refer to the electricity facts label. Most advertised rates have additional fees that might bring the rates higher than expected. You can also consult the Texas Public Utility Commission website.
You should opt for retailers listed on such sites since they are vetted by the Public Utility Commission. Read and understand the terms and conditions since most are favorable within the first few months, but become burdensome after that.
How to Save Your Electricity Cost in Texas?
Since electricity in Texas can be expensive, here are practical ways you can lower your electricity bill.
Use LEDs
The simplest and cheapest way to save your electricity cost is to upgrade light bulbs to LEDs. Generally, an LED light bulb can last for up to 25,0000 hours. Besides, it uses 75% less power than conventional light bulbs. And since it has a longer lifespan, you can use it for many years.
Invest in Energy-Efficient Upgrades
Besides using LED bulbs, you can also upgrade to energy-efficient appliances, reducing electricity bills significantly. What’s more is that there are tax credits that facilitate one to make the switch. For example, there are incentives that can help you install a solar system or buy ENERGY STAR-certified appliances. If you want to upgrade, you can consult with a professional who can audit your energy needs and recommend the most ideal upgrades.
Use Solar appliances
Another practical way to reduce your electricity bill is to use solar appliances. Robust solar appliances not only lower your bills but also act as a backup power solution. For this, we recommend buying from reputable brands such as BLUETTI.
For example, you can buy the BLUETTI EP900 + B500 Home Battery Backup that has a 9,920Wh to 19,840Wh capacity. This is more than enough to power large appliances that cause your bills to go up. The best part is that you can recharge it using solar panels, your car, and other energy sources. And thanks to its modular design, you can add expandable batteries for more energy output.
Another option is the BLUETTI EP500Pro Solar Power Station. This model can help you reduce your electricity bills significantly. With a 3000W pure sine wave inverter, it can power most of your appliances with ease. What’s more? It allows you to connect different appliances simultaneously. So, whether you want to charge your phone or power your laptop, this model got you sorted.
Another option is the BLUETTI AC70P Portable Power Station | 1000W 864Wh. A small yet practical power station for everyday use. With an 864Wh capacity, it can power small appliances reducing your electricity bills. And since it is a lightweight and portable device, you can use it for outdoor activities that require an energy source.
Final Thoughts
Texas is no doubt one of the best states when it comes to buying residential electricity. Thanks to deregulation, you can choose among retailers and get value for your money. Make sure to read the terms and conditions before settling for a retailer.
