The History of Texas Electricity Deregulation
How Texas went from city-regulated monopolies to the largest competitive retail electricity market in the country and why, in most of the state, you get to choose who powers your home.
From Monopoly to Marketplace
For most of the 20th century, a Texan's electricity company was decided entirely by geography. One utility owned the power plants, the wires, and the billing, and set the price with regulatory approval. Beginning with the Public Utility Regulatory Act of 1975 and culminating in the landmark Senate Bill 7 of 1999, Texas pulled that model apart. Today, roughly 85% of the state can shop among competing Retail Electric Providers, while power still flows over the same shared wires. This is the story of how that happened, and the map of where it did, and didn't.
Key Takeaways
The essentials of Texas electricity deregulation at a glance.
Most Texans get to choose
In the competitive ERCOT market, roughly 90% of the state's electric load, you pick your Retail Electric Provider and plan, while a regulated utility still delivers the power.
Rates below the national average
Texas's average residential price, about 16.4¢/kWh in mid-2026, runs roughly 2¢ under the U.S. average of 18.4¢, and Texas industrial power is among the cheapest in the country.
The market opened under SB 7
Senate Bill 7 (1999) launched retail competition on January 1, 2002, creating what is now the largest customer-choice electricity market in the United States.
Not everywhere is deregulated
Municipal utilities like Austin Energy and CPS Energy, electric cooperatives, and areas outside ERCOT (El Paso, East Texas) stay regulated, no retail choice there.
A Timeline of Deregulation in Texas
Six decades of legislation, market design, and reform, the key milestones that built today's competitive market.
Texas keeps its grid inside state lines
As the federal Public Utility Holding Company Act reshapes the national power industry, Texas utilities deliberately avoid crossing state lines, keeping their grid outside federal jurisdiction. That independent streak becomes the foundation for the Texas-only grid ERCOT manages today.
ERCOT is formed
After the 1965 Northeast blackout, Texas utilities create the Electric Reliability Council of Texas (ERCOT) to coordinate and safeguard the reliability of the state's self-contained power grid.
PURA creates the Public Utility Commission
The Texas Legislature passes the Public Utility Regulatory Act (PURA), establishing the Public Utility Commission of Texas (PUCT) and moving oversight of electric utilities from a patchwork of city ordinances to a single statewide regulator.
Wholesale competition begins
Senate Bill 373 opens the wholesale generation market to competition and expands ERCOT's responsibilities, the first real crack in the vertically integrated monopoly model.
ERCOT becomes the nation's first ISO
ERCOT is designated the first Independent System Operator in the United States, tasked with providing open, nondiscriminatory access to the transmission grid, a prerequisite for retail competition.
Senate Bill 7 restructures the market
Signed by Governor George W. Bush, SB 7 establishes retail electric competition. It requires investor-owned utilities to “unbundle” into three separate businesses, power generation companies, transmission & distribution utilities (the wires), and Retail Electric Providers, and creates a transitional “Price to Beat,” a Renewable Portfolio Standard, and new consumer protections.
The retail pilot program
A limited pilot lets a slice of customers begin choosing a provider, giving the market, regulators, and utilities a trial run before the full launch.
Retail choice goes live, January 1, 2002
Competition officially opens. Texans in deregulated areas can now pick their Retail Electric Provider and plan, and the PUCT launches Power to Choose, the state's official plan-comparison website. The company that owns the wires no longer decides your rate.
“Price to Beat” expires
The transitional rate that incumbent providers were required to offer sunsets on January 1, 2007, fully exposing retail prices to open competition and clearing the way for the plan variety consumers see today.
Winter Storm Uri
In February, a historic freeze pushes ERCOT's grid to the edge of collapse, causing days-long outages and record wholesale prices. The crisis drives sweeping reliability and market reforms, including Senate Bill 3's winterization and market-design requirements.
Texas Energy Fund & market redesign
Voters approve the Texas Energy Fund (Proposition 7) to finance new dispatchable generation, while the PUCT advances a market redesign aimed at improving grid reliability without dismantling customer choice.
Lubbock joins the competitive market
Lubbock Power & Light completes its transition into ERCOT, opening most of Lubbock to retail competition, the largest expansion of the choice market in years.
The Texas Deregulation Map
Deregulation isn't statewide, it follows the service territory of your local “wires” company (TDU). Hover or tap any county to see who delivers the power there and whether you can choose your provider. The pale slate areas stayed regulated.
Who's Who in a Deregulated Market
Senate Bill 7 split the old monopoly into separate roles. Understanding these four players explains why you can switch providers without anyone ever touching your wires.
Retail Electric Provider
The company you buy your plan from and that sends your bill. REPs compete on price, contract length, and renewable options, this is who you choose and switch between.
Transmission & Distribution Utility
The regulated “wires” company that owns the poles and lines and physically delivers power, including: Oncor, CenterPoint, AEP Texas or TNMP. You can't choose it, and it handles outages no matter which REP you pick.
Grid Operator
The Electric Reliability Council of Texas runs the grid and the wholesale market for about 90% of the state's load, matching generation to demand in real time.
Public Utility Commission
The state regulator that oversees the market, licenses REPs, enforces consumer protections, and runs the official Power to Choose comparison site.
