Choosing a Texas Electric Company

In January 2007, Texas Electric Companies in deregulated territories will be released from the last bit of government regulation. The Public Utility Commission of Texas will no longer have regulation powers over the large incumbent electric companies in your area. Just like buying a commodity in the open market for the best price, Texas electric companies will be able to buy based on supply and demand factors and set the electric rate on their own commodity buying strategy. Some do better then others depending on how good they are at hedging the energy they buy. Hedging strategies is a closely guarded industry secret among the electric companies and it often changes during the year from provider to provider. The electric price is often much lower depending on the type of buying and hedging strategy used.

Businesses look to save as much as 30 % over the price to beat. A little known secret, businesses that switch to a competitive rate can sometimes also get their house switched at the same time on what's called MCPE pricing. Your residence ends up paying a fluctuating market rate that historically over the last 2 years has averaged about 8 cents per KWh. In order to take advantage of this you would need to speak with a Texas aggregator to negotiate this type of agreement with a flexible electric company.

Your electric service comes to you on the same poles and wires and is serviced by the same company and people. The same company may have a slightly different name or something all together different since they were split from the Retail arm of the company. TXU, Centerpoint, AEP, Entergy, Sharyland, and TNMP are the names of the TDSP (Transmission Distribution Service Providers) that will continue to keep the lines working regardless of which electric company you pick of the 50 retail providers available to choose from.

The Retail Electricity Providers are like commodity market traders that buy the commodity, split it up, and resell it to thousands of customers. They also provide, customer service, billing, and the software infrastructure. The TDSP's are putting the poles and wires, transformers, etc. in the ground so you receive the electricity.

If negotiated successfully with some of the more competitive Texas electric companies there is no fee. If they are charging a fee that is a good sign for you to look elsewhere. There is an industry wide standard of charging some type of early cancellation penalty. They usually will not charge you this penalty if it is within the last month of the contract end date. The fairest in the market is just a fair market value penalty. Enough for Texas electric companies to recoup the risk they took in buying and hedging that amount of energy for you.

A very large portion of the Texas population has already switched to competitive Texas electric companies. It will only be a short matter of time until the electric industry has the same switching track record as the telecommunications industry.

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Choosing a Texas Electric Company