Understanding the Texas Energy Market and How it Works

The Texas energy market is known to be highly unpredictable. It generally rolls out without significant thought on customers’ behalf. The lights are available as they are supposed to, the overall rates for residential electricity are at their bottom in almost half of the state, and the overall services are quite reliable. However, this scenario got slightly altered during the beginning of this year when a severe winter storm had caused millions of residents in the state to go without electricity for several days.

Since this incident, the residents of Texas have been wondering about the scenario with the Texas electricity market and from where the bills have been costing several thousands of dollars.

Texas Energy Market Business

Around 90 percent of the residents of Texas tend to live in the deregulated energy zone. This implies that they have the power to choose the respective energy provider. Energy providers tend to be energy companies that tend to buy electricity wholesale while reselling the same to commercial or residential customers. They are committed to offering energy plans with different renewable energy content, varying term lengths, different energy rates, and so more to make themselves distinct from one another. 

Utilities in the highly deregulated energy market of Texas deliver electricity from the given providers to the end customers. They are responsible for maintaining the overall electricity infrastructure –including power lines. They are not capable of either selling, buying, or generating electricity, only for delivering energy across different parts of the state.

The ERCOT or Energy Reliability Council of Texas is responsible for managing the electricity grid of the state. It helps in scheduling how much electricity is available to the given grid at any particular time. It is also responsible for maintaining the reserves in case of increased usage.

The After-Effects of the Winter Storm

Federal and state authorities already implemented investigations into what actually occurred during the winter storm. The higher energy bills that were encountered by some customers are also being investigated. In Texas, there are two standard types of energy plans available for energy consumers:

  • Variable Rate Plans: The supply rate of electricity to the customers is linked to the wholesale rate of energy in the area. Customers having access to the variable rate plans in Texas usually faced higher energy bills during the winter storm period.
  • Fixed-Rate Plans: In this plan, the customers tend to maintain the same energy supply rates throughout the plan’s term. The only variable factors here are changes in government taxes, transmission fees, and the overall change in usage.

One of the major features of variable rate energy plans in Texas is that they are usually known to run on a monthly basis. This implies that the customers can consider leaving the particular plan without getting charged the early termination fee. The customers can fully understand the energy market in Texas and minimize the energy bills on a monthly basis by choosing the right plan.