OVERVIEW OF THE COMPETITIVE
ELECTRIC MARKET IN TEXAS

Below is a description of market segments and regulators, and their roles in Texas’ competitive electric market.

Retail Electric Providers (REPs)

• Compete with one another in the competitive retail electric market.
• Procure electricity from the wholesale market and the balancing energy market, which is administered by ERCOT.
• Market electricity and services to end-use customers, including residential, commercial and industrial customers.
• Bill customers for electric services.

Oversight

• The PUC ensures that REPs operate fairly in the competitive  electric market by enforcing customer protection rules, such as not allowing unauthorized switching of customers to new REPs, requiring fair, regimented billing practices and placing limitations on the use of customers’ credit information.

Transmission and Distribution Utilities (TDUs)

• Own and operate transmission lines—which provide high-capacity transport of electricity—and distribution lines—which bring electricity to individual homes and businesses.
• Build new lines to meet the growing demand for power in Texas.
• Maintain transmission and distribution lines to ensure continued system reliability, such as repairing older lines and trimming trees that could cause power outages.
• Following storms, restore power and other damage to equipment.
• Read meters and collect usage information.

Oversight

• TDUs are regulated companies, each providing power in their service area.
• TDUs are overseen by the PUC for construction of new lines and setting of prices.
• New transmission lines generally take about seven years to site, permit and construct.

Generation Companies

• Compete with one another in the wholesale electric market.
• Own and operate power plants that generate electricity from natural gas, coal, nuclear or renewable sources.
• Contract with REPs or others to sell power.
• Sell electricity through the balancing energy market, which is administered by ERCOT.

Oversight

• Generation companies are overseen by the TCEQ for permitting new power plants and monitoring of emissions.
• The PUC oversees wholesale market activity to ensure electricity is sold fairly on the
• balancing energy market.

Customers

• Shop for a REP that provides the price and service that meets their needs.
• Work with REPs and the PUC to resolve disputes.
• Texas’ market has brought customers a wide array of choices, allowing them to better manage their electricity needs.

Public Utility Commission of Texas (PUC)
www.puc.state.tx.us

• Oversees the rates and operations of TDUs and the construction of new transmission lines.
• Oversees the retail market and enforces customer protections
• Monitors the wholesale market and administers new enforcement authority.

Electric Reliability Council of Texas (ERCOT)
www.ercot.com

• Serves as an essential nexus for ensuring efficient and reliable electricity by managing the day-to-day operations of the largest electric grid in Texas.
• Administers switching from one REP to another, requests for new service and move-outs of electricity to end-use customers.
• Works with stakeholders to develop long-term plans for transmission and distribution lines within its borders.
• Operates the balancing energy market, in which generators can sell and REPs can purchase excess power needed to meet electricity needs based on electric demand.

Oversight

• ERCOT is overseen by the PUC. The PUC chairman serves as an ex officio member of the ERCOT board.
• The PUC also approves ERCOT’s annual budget.

Texas Commission on Environmental Quality (TCEQ)
www.tceq.state.tx.us

• Administers state and federal emissions rules in Texas.
• Issues permits for construction and operation of generating companies based on state and federal law.
• Sets regulatory standards for air and water emissions from power plants.
• Administers penalties for violations of state environmental standards.

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Click for more information on areas located outside the ERCOT grid.