According to the U. S. Energy Information Administration, Texas consumes about 13% of the total energy used in the United States, making it the number one state in energy consumption for the last 55 years. This is due to a number of factors including size of the state, high industrial energy use and large urban centers. On the positive side, Texas is a net exporter or energy, meaning it puts out more energy than it produces.

However, in the mid to late 1990's, residential customers were tired of utility companies monopolizing the energy market and enacting significant rate increases. Relief for Texas residents began in 2002 with the passage of Senate Bill 7 (SB 7) that put a plan in place to deregulate the energy industry over the course of several years.

A major part of the plan involved combating energy monopolies and high prices by dividing utility companies into three separate entities: Retail Electricity Providers (REPs), distribution/transmission and power generation. In order to be classified as an REP, the organization had to successfully register with the Public Utility Commission of Texas (PUCT) in order to supply energy to customers. The distribution and transmission aspect of energy was the second entity, made of a traditional utility company whose job was to maintain poles and wires as well as effectively deliver service to customers. The third entity, power generation, also needed to register with PUCT with its main responsibility to generate electricity through power plants. Power generation in Texas currently comes from multiple sources including crude oil, natural gas and wind.

Allowing customers to evaluate and select a REP was a component that allowed for energy choice in Texas. The idea of "Price to Beat" from lawmakers allowed time for smaller REPs to establish their businesses and customer bases without being undercut by larger former utilities. Established former utilities could only charge the "Price to Beat" or higher while emerging REPs could charge lower rates to attract customers for a set time period.

Although prices did continue to increase after "Price to Beat" was phased out, energy choice flourished. Between 2010 and 2017 Texas residents saw prices level out and even fall below the national average.


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