In June of 1999, then Governor George W. Bush signed Senate Bill 7 into law which deregulated the Texas electricity market, and it was perhaps one of the most favorable moves for state energy consumers to date. The deregulated electricity market in Texas allows multiple companies to enter the market helping to drive prices down for consumers. Electric companies in Texas operate a little differently than in other parts of the country and it doesn’t seem to be such a bad thing.
Before we can talk about how Texas electricity rates compare to the national average electricity rates, it is first necessary to understand a little bit about the Texas market and how it operates. There are retail electricity providers and electricity utility companies and they each have different functions. Here’s what you need to know to understand how the electric industry works in Texas and how their rates compare to the national average.
Texas Electricity Market
Consumers can purchase their electricity from any one of the 100 or more electric companies in Texas. These companies are referred to as retail electricity providers. These providers purchase electricity on the wholesale market and sell it directly to the consumer at retail prices. These companies are responsible for billing customers, communicating with the Electric Reliability Council of Texas, and paying for service distribution. This competitive market helps keep prices low for retail consumers who can purchase from any company they wish.
There are also multiple electricity utility companies in Texas but there are mainly 5 major companies recognized in the marketplace. They are referred to as Transmission and Delivery Utilities because they are responsible for transporting electricity from the power station to consumer residences and businesses. Electric utility companies are assigned based on a physical address and are responsible for infrastructure reliability along with power outage issues.
Texas Electricity Prices
Texas electricity prices may have seen a spike in 2022 but the prices have been on the decline since then. The deregulated market keeps Texas electricity prices competitive, and the positive signal given by the reserve margin indicates that prices will continue to fall going forward. Texas consumers are likely to enjoy prices well below the national average throughout the year 2027 according to energy futures.
Current Texas electric prices are already lower than many other states in the country. Consumers enjoy electric prices at least 8 percent below the national average of 15.96 cents per kilowatt hour. Companies also reap the benefits of a deregulated market. Business rates are a whopping 26 percent below the national average of 12.77 cents per kilowatt hour.
Electric Companies in Texas Offer Low Rates
The electric rates in Texas come in well below the national average for both businesses and private consumers. Information from the Electric Reliability Council of Texas (ERCOT) indicates that prices will continue to decline or hold steady throughout the year 2027, allowing consumers to continue the savings. Retail electric companies in Texas offer competitive rates after purchasing on the wholesale market to sell directly to consumers at retail rates that are well below the national average and show no signs of increasing any time in the near future.