At one time, each home or business was required to purchase their electricity from a single company in any particular region of the country.  Those companies controlled the generation, transmission, distribution, and sales & billing function of the industry… in other words, ALL OF IT.  They set the price of electricity for each customer through a complicated process of approvals with a state-guaranteed rates of return on their investment.  Hence, you were forced to pay what your utility company and state regulators deemed to be the cost of your electricity, without the benefit of competition.

When deregulation emerged, the individual states began separating these vertically integrated monopolies into merchant businesses for the generation and sales & billing functions, leaving the transmission and distribution portions regulated.  This allows merchant companies to compete for the commodity price sensitive areas of the business, saving the savvy customer money on their electric bills.  The poles and wires remain regulated, so one company, the same company, continues to deliver service and make repairs.Many states started passing deregulation laws in 1977, allowing energy suppliers to offer natural gas and electricity directly to their citizens, bypassing the monopolies.

Electric deregulation in Texas began on January 1, 2002.  This new process put choice back in your hands… the power to choose which provider is right for you.  The main concept for the customer to understand is that you have the right to choose the best retail electric provider for your individual circumstances AND you have the protection of the public utility commission to ensure that the electricity is as reliable as it has always been.