How It Works

Nobody sells you different electricity

This is the thing to get straight first, because almost every argument about deregulation depends on it. The electricity in a deregulated house and the electricity in a San Antonio house is the same electricity, from the same grid, made by the same power stations, delivered down the same kind of wire.

What competition changes is who bills you. That is a real change with real consequences, but it is not a change in the product.

San Antonio today

1. One organisation, three jobsCPS EnergyGenerates power, owns the poles and wires, reads the meter, sends the bill.
2. YouOne bill, one number to ring when the lights go out.

The surplus has nowhere else to go: it returns to the City of San Antonio, which owns the utility, and pays for police, fire, streets and parks.

Under retail competition

1. GeneratorsPower stations owned by companies like Vistra and NRG.
2. ERCOT marketElectricity is bought and sold wholesale, at a price that changes every few minutes.
3. The part you chooseYour retailerBuys wholesale, sets your price, sends the bill. Owns no power stations and no wires.
4. UnchangedDelivery companyStill owns the poles and wires, still restores your power. You cannot choose it and it charges everyone the same.
5. YouOne bill — but a different company to ring depending on the problem.

The retailer's margin is why it exists. It goes to its owners, who are usually not in Texas, and none of it reaches the city budget.

What each company actually does

The generator

Owns the power stations. Sells electricity into the ERCOT wholesale market, where the price moves every five minutes. Companies like Vistra and NRG are among the biggest. CPS Energy is one too — the third-largest generating operator in Texas.Source

The wires company

Owns the poles, the transformers and the meter. It maintains them, reads the meter, and sends crews out after a storm. In deregulated Texas this is CenterPoint in Houston, Oncor around Dallas, AEP in Corpus Christi and Abilene, TNMP around Galveston.

You do not choose it and you cannot switch it. It is a regulated monopoly, and every retailer in its area passes through its charge identically. Switching providers does not change who restores your power, or how fast.

The retail provider

This is the part competition adds, and the only part you choose. It buys wholesale electricity, decides what to charge you for it, and sends the bill. Most own no power stations at all — 39 of the 49 retailers currently selling in Texas generate none of the electricity they sell.Source

Its margin is the reason it exists. That is not a criticism; it is the business model. But it is a cost that sits between the power station and your bill, and it did not exist before.

Why the advertised price is not the price people pay

Shopping sites show a low cents-per-kWh number. That number is real. It is also a twelve-month promise, and the interesting question is what happens in month thirteen.

1. Day one You shop and sign You pick a low advertised rate and lock it for a fixed term. This is the number comparison sites show, and for now it is what you pay.
2. Months 1–12 The rate holds Leaving early usually costs a termination fee — typically $150, and up to $395.
3. Month 12 The contract ends A notice arrives. Acting on it means shopping the whole market again, on time, and switching.
4. Month 13 onward If you do nothing You roll onto a month-to-month holdover rate that nobody advertises and that can change every month. Most households end up here, and stay.

This is why advertised prices and paid prices are different numbers. Offers list around 11–12¢, but across every deregulated household in Texas the price actually billed in 2024 was 16.66¢ — against 12.43¢ for CPS Energy customers. Source: EIA Form 861

Nothing in that sequence is a scam. The contract ends when it says it will, the notice goes out, the holdover rate is disclosed. It is simply a system that rewards people who re-shop the entire market every single year, on time, forever — and quietly charges everyone else more.

That is the mechanism behind the single most important figure on this site. Advertised rates cluster around 11–12¢. Across every deregulated household in Texas, the price actually billed was 16.66¢, against 12.43¢ for CPS Energy customers.Source

Things that surprise people

• Your outage is not your retailer’s problem. Report it to the wires company. Your retailer has no crews.
• Leaving early usually costs money. Early termination fees are typically $150 and run up to $395. A municipal utility has no contract to break.
• The cheapest advertised plan is often a bill-credit plan. It only reaches that price in months your usage clears a threshold — miss it in one mild month and that month costs far more.
• “Fixed” does not mean the bill is fixed. It means the rate per kWh is fixed. Your bill still moves with how much you use, and the price per kWh still moves with how much you use on plans with a fixed monthly charge.
• Roughly a third of Houston offers cost more than CPS for the same electricity use, before any of the above.

The honest summary

Competition gives you a choice you did not have, and if you use that choice well, every year, you can beat the regulated rate — our own tool will show you exactly when.Source It also adds a company that must be paid, removes a payment the city depends on, and moves a large share of households onto rates nobody advertises.

Both of those are true at once. Deciding whether the trade is worth it is the actual question in front of the Legislature.

Compare your own bill →
What the city stands to lose →