Structure of the Texas Power Market
Deregulation in Texas allows the consumers to choose their electricity company – including the ability to select a green energy company. The Electric Reliability Council of Texas (ERCOT) is responsible on managing most of the state’s deregulated energy market. It is the central controller of the majority of the energy market’s activities which includes the power operations, power scheduling, and retail market data transactions between the three units; a retail electric provider, a power generation company, and a transmission and distribution company. Each legacy utility in ERCOT geography was un-bundled. As of October 2010, reports shows that the Texas retail market has produced 38 residential suppliers and 60 non-residential that offer over 250 residential products. The number of switch rates (from incumbent suppliers to electric retailers) is continually rising with a percentage of 68.1% of eligible residential customers (many have gone with a green energy company for their home) and nearly 80% of eligible commercial customers.
The introduction of electricity competition into Texas’ wholesale and retail electricity markets has made Texas a great success story in the United States by eliminating regulated utilities, usually a government-mandated monopoly. American electricity markets transformation was dominated by a political competition to promote design markets. However, Texas is not considered as a design market since it set general rules for the participants and allows them to compete, given with equal ways and treatment.
The retail competition in Texas is growing, just like any other capital market that operates under competitive practices. They have three measures to detail the high level of competition within the area. First would be the percentage of high-rating electricity sold by incumbent utilities weighed down, which makes them drop not as much as 40% where each of them used to have a hundred percent before the competition has been introduced. Second, almost 82 percent of electric consumers have actively chosen competitive rate plans, while the rest have benefitted from competition through lowered rates on old plans or getting competitive rates through move-ins. And lastly, over 138 plans offered by 29 different energy providers, an average Texan in ERCOT has a variety to choose from.
Electricity deregulation is really a nice move for a state to make not only for breaking new grounds for retailers but also for the benefit of the citizens of Texas and having the ability to choose a green energy company for their home or business.