Electricity 101

Understanding the Texas Power Grid

Gexa Energy
April 26, 2023
minutes read
Gexa Energy
Publication Date:
October 5, 2023
Last updated:
October 6, 2023

They say everything is bigger in Texas, and that’s true when it comes to the Texas electricity grid. Texas is the only state in the contiguous United States with its own electrical grid and makes up one of three power grids in the nation: the other two serve the eastern and western states.

Texans may not think twice about where their electricity is coming from when they switch on a lamp or plug in electronics. But understanding how Texas utilities work, how energy gets to your home, and the companies available to choose from is important for homeowners throughout the state.  


Why does Texas have its own power grid?

Let’s start with a brief history of the Texas power grid. When the Federal Power Act was passed in 1935, private utility companies in Texas collectively decided not to share or sell power to other states to avoid federal government oversight. These individual companies formed the Texas Interconnected System during World War II to help with the increased factory production related to the war effort.  

Years later, in 1970, the Electric Reliability Council of Texas (ERCOT) was formed to ensure that the state’s power grid reliability and security met national standards. In 2002, deregulated power in Texas became legal, with the state legislature passing a bill that opened up competition in the energy sector.  

ERCOT now manages the power plants and energy flow of more than 100 private Texas utility companies, which provide power to 26 million energy consumers. The current competitive market may help consumers save money on electricity bills in Texas.

Does every Texan have the power to choose?

At this point, you may be wondering if residents in every city have the power to choose a Texas energy company. Depending on where you live in The Lone Star State, you may or may not be able to shop around for a local Texas retail electricity provider.

When the 2002 deregulation bill was passed, Texas utilities owned by investors were forced to be deregulated, while municipal energy providers and electric cooperatives had a choice. More than 400 cities are members of the free energy market in Texas, including Fort Worth, Dallas, and Houston; however, there are 72 cities that do not participate in this competitive market, including San Antonio, Austin, and Brownsville. Additionally, El Paso, some cities in the panhandle, and several towns in East Texas receive power from neighboring grids—not from the power grid in Texas.

How does the deregulated Texas power grid work?

Here’s how the different types of electric companies in Texas work together:

Power Generators: Power generation companies own and operate facilities that create electricity. These facilities include all types of power plants like coal, nuclear, natural gas, and renewable energy, such as wind and solar. Power generation companies sell power to retail electricity providers.

Retail Electricity Providers (REP): After REPs purchase electricity from the power generation companies, they sell that electricity to residential and commercial customers. Every REP works with each utility that owns and operates the transmission equipment and facilities that distribute Texas electricity—to ensure power is delivered to customers in the correct service area.  

Texas consumers living in cities with deregulated energy get to choose their REP. For example, Gexa Energy serves customers throughout Texas as a REP, offering a variety of cost-effective plans and energy-saving options.

Transmission and Distribution Utility (TDU): Also referred to as Transmission and Distribution Service Providers, TDUs are responsible for the transmission and distribution of electricity service to all homes and businesses within a service area, working closely with REPs. A TDU owns, maintains, and repairs all the lines, wires, poles, and meters in its service area. The six TDUs in Texas are Centerpoint, Oncor, Texas-New Mexico Power, AEP North, AEP Central, and Sharyland.

Public Utility Commission of Texas (PUCT): The PUCT regulates REPS, TDUs (as well as water, sewer, and telecommunications utilities) and oversees ERCOT. It sets Texas electricity rates, ensures equal treatment among REPs and energy customers, and provides general oversight of competitive Texas energy companies.

Customers: Consumers can choose their REP and, as customers of the REP, are provided with electricity services from a TDU that services their area. Customers pay Texas utility bills to their REP and contact their REP for service-related questions.

Why you should choose Gexa as your REP?

Gexa Energy is a REP providing affordable energy service to residential and commercial customers. We work with TDUs to deliver electricity to consumers throughout Texas, from Dallas to Waco to Corpus Christi.  

What sets us apart from other Texas energy companies? We offer our valued customers their choice of energy plans at affordable prices—and every residential plan includes 100% renewable energy*. Learn about wind energy and solar energy and how harnessing both can help you create a more energy-efficient home.

Take a look at our:  

  • Month-to-month: If you’d rather have month-to-month pricing, choose this plan.  It is a no-contract plan with variable prices.
  • Rooftop solar plans: We offer plans designed for rooftop solar owners. Learn why you should make the switch to solar.
  • EV plans: Do you have an electric vehicle? With our EV plans, you can save on EV charging year-round.

Your Texas home should be prepared to power the items in your household no matter if it’s the middle of a hotter-than-hot summer or an icy-cold winter. With Gexa Energy, your household’s electricity will be covered with cost-competitive, 100% green energy*. As a homeowner, you can rest assured that choosing Gexa for your electricity needs is helping the environment. That’s the benefit of renewable energy.


Choose The 100% Green Electricity Plan That's Right For You.
Find the right electricity plan for your business
Save on Nighttime EV Charging
Interested In Solar? We Can Help With A Free, No Obligation Quote.
Request a Quote
Save on Nighttime EV Charging
Interested In Solar? We Can Help With A Free, No Obligation Quote.
Request a Quote
Save Up To 23% On Heating And Cooling Costs With Emerson Sensi™ Smart Thermostats.

More Electricity 101 recommended articles

Explore other categories

Gexa Energy purchases renewable energy credits (RECs) from renewable generation resources throughout North America to match 100% of the energy sold under your electric plan. The RECs Gexa purchases represent the renewable attributes of power generated from a variety of renewable energy sources, including, but not limited to, the sun, wind, geothermal, hydroelectric, wave or tidal energy, and biomass or biomass-based waste products, including landfill gas.