Texas Electricity 101

Nov 4, 2016 | Electricity 101 | 0 comments

In order to understand the Texas electricity market, it helps to think about any product you may buy from as an  online retailer – for example consider who’s involved each time you order a pair of shoes online. The shoes are made in a factory somewhere by a wholesaler. Then a retailer buys hundreds, thousands or millions of shoes from the wholesaler. The retailer has created a pretty, easy-to-use website where you can browse for just the right shoe and purchase it. Once the purchase has been made, your new shoes need to get to your doorstep. This is where a distributor enters the picture (think UPS). The retail electricity market works very similar to any other retail market.

Power Plants, like any manufacturer, take raw materials and turn them into a product. In the case of electricity, they harness materials such as wind, coal, natural gas, etc. and use those resources to generate electricity. Once the electricity is made, they are only interested in selling large quantities of it. So they sell to electricity retailers instead of individual customers.
Retail Electricity Providers (REPS) are built to interface with customers like you and provide you with the best experience possible. So they buy large quantities of power from power plants and sell it to individuals like you. Since all electricity is created equal, we understand that when you pick an electricity plan, you are really picking an experience. So at 4Change Energy we are committed to delivering the best electricity experience possible. That’s why we make it a breeze to sign up, pay your monthly bills and renew with us.
Transmission and Distribution Utilities (TDUs) also play a very crucial role in the Texas electricity market. The keyword here is distribution. They are the ones who distribute the electricity from the power plants to your house. Some people call them the “poles and wires” company because they maintain the power poles and wires that you see everywhere along the side of the road. Ever see people up working on one of those poles? Those are employees of your TDU. Your TDU is also responsible for maintaining the meter on your home and tracking how much electricity you use. Every 28 days or so, they report your total usage to your Retail Electricity Provider and your REP uses that report to generate your bill.
The Electric Reliability Council of Texas (ERCOT) manages the flow of electricity to millions of Texas residents. ERCOT also schedules power on a massive grid that connects over 40,000 miles of transmission lines. So when you tell your Retail Electricity Provider that you want your power turned at next Monday, they tell ERCOT and ERCOT performs the transaction.
We understand that paying for something like electricity can seem very abstract, and we certainly understand that it’s more fun to buy new shoes than to buy something you never even see. But we hope this brief overview gives you a better understanding of how the Texas electricity market works and what exactly you are paying for.


4Change Energy
Dave is working on a Master’s Degree in Marketing from the University of Texas at Dallas and has three young kids at home, so he doesn’t have much free time. But when he finds some, he enjoys snowboarding, boating, hiking and pretty much anything that gets him in out in the fresh air.

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