How This Deregulated Electricity Market Works

The advertisements for electricity providers in Texas are many. In a system that has been deregulated for the provision of public utilities, it frees up free market competition. In other words, you can buy your electricity from someone else other than the company that has run the wires through your town and generates electricity closest to your house. We have Reliant energy. They are the provider that is physically closest to us. There is a power plant not 20 miles from where we live.

We could have chosen electricity sellers from just about anywhere as long as they are approved to market electricity here in Texas. This gets so confusing to people. They wonder how they can buy electricity from some other company. People ask if new wires will be run to their houses. The distribution system has become part of the nationwide grid. It does not matter who actually paid for the wires, the poles they are strung on or who actually services the wires where you live. Now you can just buy the electricity from a different provider.

Think of it as a big tank of electricity. Power is generated and distributed all over the country on power grids. Your meter tells how much you actually use. The rate you pay is set by your provider. Technically you may be getting electricity from your local plant, but you are paying a rate set by whatever provider you have. Remember, all the plants are putting electricity into the tank. There is no keeping track of individual electrons generated by any particular plant.

Now if you support a provider that generates green energy, your money is going to them for power generation even though technically your actual electrical electrons flowing into your house may have been generated locally. Weird sounding, but that is how this new market works.

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