Deregulated vs Regulated Areas in Texas

The Two Electricity Systems in Texas

Texas does not have a single electricity system. When the state deregulated in 2002, it gave most — but not all — Texans the ability to choose their electricity provider. The result is a split: about 85% of customers live in deregulated areas with provider choice, while 15% live in regulated areas served by a single utility.

Understanding which system applies to your address is the first step in managing your electricity costs.

Deregulated Areas

If you live in a deregulated area, you can choose your Retail Electric Provider (REP) from dozens of competing companies. Your local Transmission and Distribution Utility (TDU) still delivers the electricity, but you pick who you buy it from.

The four major TDU territories make up the deregulated market:

Oncor

• Serves: Dallas-Fort Worth metroplex, Waco, Midland, Odessa, and surrounding areas
• Customers: Over 10 million
• Coverage: The largest TDU territory in Texas

CenterPoint Energy

• Serves: Greater Houston metropolitan area
• Customers: Over 2.8 million metered customers
• Coverage: Houston and suburbs

AEP Texas

• Serves: Corpus Christi, McAllen, Laredo, Rio Grande Valley, parts of West Texas
• Customers: Over 1 million
• Coverage: South and West Texas

Texas-New Mexico Power (TNMP)

• Serves: Scattered areas including parts of the Houston suburbs, Central Texas
• Customers: About 270,000
• Coverage: Various locations across the state

In these areas, you compare plans, choose a REP, and can switch providers whenever you want. Competition keeps rates in check, and you have access to a wide variety of plan types: fixed, variable, indexed, renewable, free nights, and more.

Regulated Areas

If you live in a regulated area, a single utility handles everything: generation, delivery, and billing. You cannot choose a different provider. Regulated areas in Texas include:

Municipal Utilities (Munis)

Cities that operate their own electric utilities opted out of deregulation. Major examples include:

• Austin Energy — Serves Austin and surrounding areas. One of the largest municipal utilities in the US.
• CPS Energy — Serves San Antonio. Provides both gas and electric service.
• Lubbock Power & Light — Serves parts of Lubbock (though parts of Lubbock are in Oncor’s deregulated territory).
• Bryan Texas Utilities — Serves Bryan.
• Garland Power & Light — Serves Garland.
• Greenville Electric Utility System — Serves Greenville.

Municipal utilities are owned by the city and governed by the city council. Rates are set through a public process, and any profits go back to the city’s general fund.

Electric Cooperatives (Co-ops)

Electric cooperatives are member-owned utilities that primarily serve rural areas. There are over 70 electric co-ops in Texas, serving about 3 million Texans. Examples include:

• Pedernales Electric Cooperative — The largest co-op in the US, serving the Texas Hill Country
• Bluebonnet Electric Cooperative — Serves areas east and south of Austin
• CoServ Electric — Serves parts of Denton and Collin counties

Co-ops are governed by elected boards of member-owners. They typically charge rates that cover their costs plus a small margin for reserves and infrastructure investment. Some co-ops distribute patronage dividends (refunds) to members when finances allow.

Key Differences

Feature	Deregulated	Regulated
Provider choice	Yes, dozens of REPs	No, single utility
Rate setting	Market competition	Utility or city council
Plan types	Fixed, variable, indexed, etc.	Usually one standard rate
Contract terms	You choose length and terms	No contract, continuous service
Renewable options	Many 100% renewable plans	Varies by utility
Who to call for outages	Your TDU	Your utility
Who sends your bill	Your REP	Your utility

Edge Cases and Overlaps

Some areas create confusion because of boundary overlaps:

• Lubbock is partially deregulated (Oncor territory) and partially served by Lubbock Power & Light (regulated).
• New Braunfels is served by New Braunfels Utilities, a municipal utility, even though nearby areas are in deregulated territory.
• Parts of suburban Houston and Dallas may be served by co-ops even though neighboring subdivisions are in CenterPoint or Oncor territory.

The rule is simple: your electricity situation is determined by the specific address, not the city you live in. Always check your exact address.

What to Do in a Regulated Area

If you are in a regulated area, you do not have the option to shop for a different provider. But you can still manage your costs:

1. Attend rate hearings. Municipal utilities hold public hearings before rate changes. Your voice matters.
2. Ask about programs. Many munis and co-ops offer demand response programs, weatherization assistance, and time-of-use rate options.
3. Focus on efficiency. Without the ability to shop for a lower rate, reducing how many kWh your home needs is the best way to lower your bill.
4. Check for solar options. Some regulated utilities offer net metering or solar buyback programs.

The Bottom Line

Whether your area is deregulated or regulated comes down to your specific address. In deregulated areas, you have the power to compare plans and choose the provider that fits your home. In regulated areas, your utility sets the rate, but you can still manage your bill through efficiency and engagement with your local utility’s programs. Enter your address on ChooseMyPower to find out which system serves your home.