Texas Electricity Market
HOW IT WORKS
How do Electricity Bills work?
At the end of the day, you create your electricity bills with your choices. Your bill is a direct reflection of how you consume energy and how much electricity you use. It is also a function of your electricity cost, transmission and distribution costs, and taxes. That function can look different depending on the plan you choose and its rate structure.
Ultimately, your bill will not only depend on your energy usage but also your plan selection. As a result, you want to ensure that you pick a plan that best fits your lifestyle, preferences, and energy goals. You work hard for your money, so instead of wasting it, you want to save as much as possible. EnerWisely is the only service that calculates matching scores to find the electricity plan with the lowest cost electricity plan based on real usage. EnerWisely is also the only service that maximizes your savings finding and fixing energy leaks, improving efficiency, and reducing environmental impact. Best of all, EnerWisely is free of charge for Texas households in deregulated electricity markets.
How Am I Charged for Electricity?
Multiple factors affect the charges for the electricity that you use.
1. Retail Electric Providers
The Retail Electric Providers buy wholesale electricity, sets the price, and the rate structure of the plan offered to customers. REP’s sells that electricity directly to retail customers in deregulated areas of Texas. When you select your REP, that provider typically buys the electric power they sell from the generation companies.
While some of the larger providers own their power generation plants, most buy from generation companies. REP’s are then charge for the use of the transmission and distribution infrastructure owned by the local Electrical Utility Companies to deliver and meter the electricity sold to consumers. Consequently, the REP’s transfers that charge over to you. Depending on the type of rate you select, the transmissions and distributions charges might be itemized or bundled into the overall electricity cost. One way or another, consumers’ energy cost always includes the value of the electricity itself and the cost of using the transmission and distribution infrastructure.
2. Rate Structures
Another factor to consider is the type of rate structure you’re selecting. In a deregulated market, there are several types of rates and many types of plans to choose from, for example, fixed, variable, indexed, and even wholesale. So you’ll be charged according to the kind of rate or plan that you choose.
3. State & Local Taxes
In Texas, the sales tax on retail sales is 6.25%. Besides, based on the district, county, city, etc., other types of sales tax can apply. Some businesses qualify for a sales tax exemption on their utility bills. Examples include some manufacturing companies and eligible residential businesses, including nursing homes, also apartments, and condominium buildings with a master meter.
Ultimately, the charges in your electricity bills will depend heavily on your energy use. Electricity consumption is the amount of electricity used over a specific period. Kilowatt-hours (kWh) is the typical unit of electricity consumption. The more power you consume within a given period, the higher your electricity bill tends to be. That’s because usually, use drives the electricity cost in your electricity plan and also drives the transmission and distribution charges previously mentioned.
Electricity Generation, Transmission & Distribution
Electricity moves from the point of generation to the point of ultimate consumption through aninterconnected network known as the electrical grid, which consists of three separate parts:
- Generation – the production of electricity by power plants
- Transmission – the movement of electricity from the point of origin to a distribution system
- Distribution – the delivery of electricity to customers’ homes or businesses by utility companies
Once, the electricity is generated it arrives at an initial transformer. A transformer converts alternating current from one voltage to another and can be designed to “step up” the voltage or “step down.” In preparation for transmission over long distances, the transformer steps up the voltage. Afterwards, transmission lines carry the high-voltage electricity before arriving at a neighborhood transformer, which steps down the voltage. Smaller distribution lines then carry the electricity to households, where transformers on the poles step down electricity once more before it is able to enter your home or business. Where, ultimately, Energy Powers You!
Regulated vs Deregulated Electricity Market
Today, most of TX is deregulated. However, there are still areas of Texas that remain regulated markets. In regulated electricity markets, customers cannot choose their provider and are bound to the utility in that area. They have no choice but to purchase electricity from regional utility monopolies that own and operate all three parts of electric service. Customers also have to purchase at prices regulated by the state and federal government.
What electricity deregulation does is allow consumers to choose their own electric company and encourage free market competition. In deregulated areas, prices can be determined and driven lower than in regulated areas because of the competition. In a deregulated place, a person’s electricity is still delivered to them through local power lines. What changes is the power to choose what source of power to use (renewable content), who they’re buying power from, how much they’re paying for it.
Electricity Market Deregulation and Choice
Deregulation in Texas opens the door to numerous, more flexible energy options thanks to competitive suppliers being able to offer a greater variety of customized solutions. In deregulated areas, every electricity consumer has the power to choose his or her desired providers and plans. It is important to now that once you make a choice, that choice is not permanent. You also have the power to switch electricity providers in order to find the services and rates that continue to best meet your needs and wants.
With So Many Choices what is the best way to Compare Electricity Plans?
While a deregulated energy market comes with its perks, it also comes with its challenges. The sheer amount of competition amongst suppliers has made it much harder for people to comparison shop and identify options that satisfy both their cost and lifestyle preferences. With so many different types of rates, plans, contract terms, fees, discounts, etc., there is a generally perceived lack of transparency and a sense of confusion.
Until now, no person had access to easy to use smart tools to properly analyze and navigate through the hundreds of available electricity choices. That is understanding not only their effective total cost based on their actual consumption trends but also the environmental implications of their electricity usage. After all, the power of choice combined with consumer awareness could represent towards achieving sustainable energy for all. That’s why EnerWisely sustainability platform provides access to the tools and knowledge to make the most of your energy choices.
Understand Your Consumption with Energy FingerPrint
EnerWisely’s Energy FingerPrint is a free online energy use cost calculator that helps you understand how you consume energy. It reveals consumption trends, like the categories of use (lights, electronics, air conditioning, etc.) and time-bound metrics (consumption by days, nights, seasons, etc.). It also shows energy wastage and the money you’ll save if you address energy leaks. Lastly, it details the environmental impact of your energy usage.
With your consent, Energy FingerPrint accesses your real-time usage profile to run the analytics. Because it reviews hard data, it provides you with a clear picture of your energy use and uncovers points for improvement to help you save more.
On top of that, Energy FingerPrint is free and 100% online. You can get a full assessment in less than 10 minutes.
Shop the Electricity Market and Get the Best Plan with Energy MatchMaker
EnerWisely’s Energy MatchMaker analyzes your energy consumption and finds the electricity plan with the lowest cost and biggest savings. Like the Energy FingerPrint, it uses your real usage profile to assess your consumption. It then analyzes the details of every energy plan in Texas to determine compatibility with your usage patterns.
Then, it ranks the plans according to its agreement with your energy usage. You’ll get customized recommendations. It shows you the plans that match your profile.
For Customers across Texas
EnerWisely presents an easy online shopping platform that caters to people who are moving to Texas or households in Texas that want to switch electricity providers.
We have a platform that serves all Texas residents, but we also have separate, dedicated platforms for Houston and Dallas.
For questions about our services, contact the EnerWisely team.