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Who are the Players in the Texas Electricity Market?

players in the Texas electricity market

Understanding how the deregulated Texas electricity market operates can be a daunting task. Granted, not all Texans live in areas of the state where choosing an electricity provider is an option, but understanding how the players driving the Texas electricity market work together will help you become a more informed energy consumer.

Here are the major institutions that directly impact the Texas electricity market:

  1. The Public Utility Commission of Texas (PUCT) protects your electricity rights, in addition to specific responsibilities and regulations therein;
  2. Electricity Reliability Council of Texas (ERCOT) manages of the Texas electricity market;
  3. Retail Electricity Providers (REP's) are the independent electricity companies that sell electricity to customers;
  4. The five Transmission and Distribution Service Providers (TDSP's) take care of the lines, poles, and meters across the state, acting as the go-between for the power generators, REPs, and the consumer;
  5. Power generators produce electricity and place it on the grid; and
  6. The customer and the power of electricity choice created by deregulation.

Each section will detail the important players, their responsibilities in the Texas electricity market, and how each affects the energy bottom line for Texas businesses and consumers.

Public Utility Commission of Texas

The Public Utility Commission of Texas (PUCT) is the state agency responsible for the regulation and oversight of electric services in Texas. The PUCT regulates the delivery of electricity to ensure the safety and reliability of your service. The mission of the PUCT is to protect customers, foster competition, and promote high quality infrastructure.

The PUCT operates as a state-level advocacy organization that protects consumers from being treated poorly by electricity companies. It's also responsible for the regulation of electric and telecommunications services. It works to ensure that the Texas electricity market maintains quality and safety and that poor business practices will not dampen the competition fostered by deregulation.

In other words, the PUCT has its hand in a wide swath of the Texas electricity market, both the regulated and deregulated varieties. It's responsible for making sure that the electricity grid is operating properly, but it also advocates for the consumer in case a Retail Electricity Provider (REP) treats a customer poorly.

Regarding the actual electricity service, the PUCT regulates the rates and terms of service for transmission and distribution of electricity by the 5 Transmission and Distribution Service Providers (TDSP's) in Texas, sustains the Electric Reliability Council of Texas (ERCOT) market (as 85% of the state's electric load is maintained by ERCOT), and administrates the state's renewable energy resources, along with sundry duties to regulate how the electricity and telecommunications market operates.

The PUCT does not regulate:

  1. Long distance
  2. Wireless telecommunications service
  3. Gas
  4. Water
  5. Cable TV rates and content
  6. Rates established by municipal electric utilities
  7. Rates established by electric cooperatives
  8. Internet or Internet Service Providers (ISPs)
  9. Integrated Services Digital Network (ISDN)

ERCOT

The Electric Reliability Council of Texas (ERCOT) administrates the Texas electricity grid and controls 85% of the deregulated electricity market in the state, making it the leading authority for the flow of electricity in Texas. As a corporation, ERCOT is comprised and governed by a board of directors from investor and municipally owned electric utilities, generators, independent members, and consumers to maintain and ensure the reliability of the power grid that operates in the State of Texas. They make sure you get electricity into your home or business.

Granted, managing the smooth delivery of power to over 22 million Texans can become a substantial undertaking, and ERCOT performs this task with an electricity grid that provides more than 85% of the electricity load for all of Texas. ERCOT is responsible for over 40,000 miles of transmission lines and 550 generation units around Texas. And on top of all those responsibilities, ERCOT also supervises the financial agreements and deals for the wholesale bulk-power market across the state, as well as ensuring the seamless switch of customers from one REP to another for the millions of Texans that live in the deregulated parts of the state.

As stated above, the PUCT specifically conducts oversight of ERCOT and ensures that the necessary and essential market rules are observed so that consumers are protected from market manipulation, power abuse, and anti-competitive business practices.

Retail Electricity Provider

A Retail Electric Provider (or REP) is any electricity company that has been approved by the Texas Public Utility Commission to sell electric services to residential and commercial customers. If you presently receive an electric bill from Bounce Energy, then Bounce Energy is your REP.

Each REP operates independently under deregulation in the Texas electricity market, as they compete with each other to entice potential customers to sign up for service. This is accomplished by offering a variety of rates and plan options (including green or renewable energy), as well as special incentives and other customer benefits.

The REP is the company in the Texas electricity market that is responsible for customer service, billing, and the actual selling of electricity service to customers. The REP is the familiar face in the Texas energy market.

What is the actual relationship between the REP and the average Texan needing electricity?

  1. Whether it's a switch at your current address or a move-in at a new address, the customer contacts the REP to places a new order for service.
  2. The REP logs your service order with the Transmission & Distribution Service Provider (TDSP) that services your area and with ERCOT (who ensures that service is ready for service to start with your new REP at specific start date).
  3. Once service begins with your new REP, that REP takes care of your billing processes, delivers ongoing customer service to take care of your needs, and works with the TDSP and ERCOT on your behalf to guarantee you and electricity are in good standing.

Transmission and Distribution Service Provider (TDSP)

In the deregulated Texas electricity grid, the Transmission and Distribution Service Provider (TDSP) does exactly what its title suggests - it is responsible for the transmission and distribution of electricity service to all the homes and businesses within its service area. It does this because it owns all the lines, wires, poles, and meters in that service area. The TDSP (not the Retail Electricity Provider, or REP) conducts any and all maintenance and repairs required for those lines, wires, poles, and meters. There are 5 TDSP's in Texas:

  1. Centerpoint
  2. Oncor
  3. Texas-New Mexico Power
  4. AEP North
  5. AEP Central

No matter which REP you choose for your electricity, each TDSP is responsible for the delivery of the electricity to each residential and commercial service address in its area. As in, if there is an outage at your home or business that is not related to you paying your bill late, then there is a problem with the TDSP, not your REP.

A TDSP performs the following:

  1. Deliver electricity to the homes and businesses in its service area.
  2. Maintain the poles and wires that transmit and distribute that electricity from the power generator to the electricity grid to each consumer.
  3. Read each electricity meter and report that electricity consumption to each customer's REP for billing. The REP is responsible for billing, but it only generates a bill based upon the reading provided by the TDSP.
  4. Restores service during a power outage.

Overall, the operations and practices of the TDSP's are strictly regulated by the Public Utility Commission of Texas (PUCT). This includes the rates assessed for transmission and distribution service; safety and reliability concerns for the delivery of the electricity; and ensuring best business practices in the relationship between the TDSP, each REP, and the consumer.

Power Generation Companies

The power generation company owns and operates the facilities that actually create the electricity we use in Texas. This includes the any and all power plants, whether it's coal, nuclear, natural gas, or renewable. As defined by the Public Utility Commission of Texas (PUCT), each power generation company produces the electricity that will be sold on the energy wholesale market, but it does not own a transmission or distribution facility in the state.

Essentially, a power generation company packages power it generates, sells it to a Retail Electricity Provider (REP) like Bounce Energy, and that REP works with each Transmission and Distribution Service Provider (TDSP) to ensure that the electricity gets to the customers in the correct service area.

The PUCT and Texas Electric Choice

Operated by the PUCT, the Texas Electric Choice website (also known as powertochoose.org) is devoted to providing information to consumers who are looking to switch to a new REP. The site discusses the benefits of switching, what Texas electric choice means to the consumer, PUCT regulated terms of service and consumer protections, general information about electricity deregulation in Texas, and more.

Specifically, powertochoose.org provides electricity consumers with:

  1. Details about electric choice including the basics of the retail electric market in Texas, electricity generation, the transmission and delivery of electricity and how that is maintained, and the general safety and reliability of electricity service in Texas markets.
  2. General information about the PUCT and a link to their site.
  3. The process of switching electricity providers.
  4. Introduction to energy conservation, efficiency and general money saving tips.
  5. Questions to ask potential electricity providers.
  6. Understanding the choices consumers have when comparing providers.
  7. Offer information from REP's providing power to Texas.

Conclusion

To summarize:

  1. The Power Generation Company creates electricity.
  2. That electricity is sent to the Texas electricity grid.
  3. The electricity is sold to the REP, who in turns sells it to its customers.
  4. The electricity is delivered to customers by the TDSP.
  5. TDSP ensures reliability of the services, maintains power lines and poles, and reads meters.
  6. REP handles service and billing for its customers.

Of course, the details are slightly more technical than what's described in the 6 steps above, but we hope that this article has helped you understand how the Texas electricity grid works a bit better by discussing the various players that make it work.

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