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The Role of Utilities in the Deregulated Era of Texas Electricity

March 23, 2016
by dmirza

Before Texas became a deregulated state for electricity production, utilities managed the distribution and sale of electricity. This didn’t settle too well with consumers, as they had no choice regarding where they got electricity from, so there was no way to get cheap electricity. When the state deregulated the energy sector, utilities could no longer sell electricity; instead, retail energy providers (REPs) would sell it, and their competition would lower prices. So where did that leave the utilities?

Utilities now just handle the distribution of electricity. Electricity is produced at generation facilities like coal, gas, and nuclear plants, as well as solar and wind farms. Shares of this electricity are bought by REPs, and the electricity itself is distributed over a network of wires (known as the electricity grid) to homes by the local utility. The utility manages the flow of electricity, balancing the grid to ensure that there are no outages due to a lack of electricity, but they also address these outages when they occur.

Outages can occur for a number of reasons, including a demand that is higher than the supply of electricity, a disruption in the network due to a storm or accident, and other reasons. When these outages occur, the consumer must notify the utility, not the REP they buy electricity from. The utility will send workers to repair fallen lines or otherwise restore electricity to the areas affected.

Thanks to deregulation, customers have the power to choose their energy provider, and they cannot by law be penalized by the utility for choosing a provider other than the default incumbent provider. As a result, consumers can find cheap electricity in Texas and lower their monthly expenses.

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