A Retail Electricity Provider (REP) is a company who buys electricity at wholesale prices from the wholesale market and sells it directly to you, the consumer, at retail prices that they control. The REP is not responsible for electricity infrastructure such as poles or wires, and they do not make the electricity themselves.
Table of Contents:
- How Do Retail Electricity Providers (REPs) Work in Texas?
- What’s the Difference Between a Retail Electric Provider (REP) and a Texas Distribution Utility (TDU) or TDSP?
- What Exactly Do Retail Electricity Providers Do?
- Why Do I Need to Buy Electricity from a Retail Electricity Provider (REP)?
- Are REPs Different From One Another?
- Energy Ogre Acts as Your Agent with REPs
- How Many Retail Electricity Providers Are in Texas?
- What Companies Serve as Retail Electric Providers in Texas?
- How Can I Tell Who Provides Electricity to My Address in Texas?
How Do Retail Electricity Providers (REPs) Work in Texas?
First, it's important to understand the players in the deregulated Texas electricity market.
A power generation company owns and operates the facilities that actually create the electricity we use in Texas.
This includes all power plants, whether it's coal, nuclear, natural gas, or renewable. As defined by the Public Utility Commission of Texas (PUCT), each power generation company produces the electricity sold on the energy wholesale market.
Learn more about Power Generation and Distribution Here:
Transmission and Distribution Service Provider (TDSP)
The TDSP (sometimes called the TDU or delivery company) does exactly what its title suggests.
It is responsible for the transmission and distribution of electricity service to all the homes and businesses within its service area. It does this because it owns all the lines, wires, poles, and meters in that service area.
The delivery company conducts any and all maintenance and repairs required for those lines, wires, poles, and meters.
Retail Electricity Providers (REPs)
Finally, Retail Electricity Providers, or REPs, is the company at the "last mile," or fulfillment end, of the electricity "supply chain."
The electricity providers contract with customers to switch on (or off) electrical service and pay for it. REPs don't have warehouses to store big boxes full of electricity--or even a back room.
You know the saying: "Use it or lose it." This principle means REPs must forecast demand and buy enough electricity to cover that demand.
What's the Difference Between a Retail Electric Provider (REP) and a Texas Distribution Utility (TDU) or TDSP?
Because we live in a deregulated energy market, it can be confusing to understand the differences and responsibilities of both your electricity provider and the utility distribution provider. Luckily, we've made a handy chart breaking down exactly who does what:
Retail Electricity Providers (REPs)
Transmission and Distribution Utility (TDU or TDSP)
Where does my electricity come from?
A Retail Electric Provider purchases wholesale electricity from wholesalers.
A Transmission and Distribution Utility sells wholesale electricity to REPs.
Who owns & maintains utility poles and power lines?
A Retail Electric Provider does not own or maintain any electricity infrastructure.
A Transmission and Distribution Utility owns and maintains utility poles, power lines, meters, and other equipment responsible for transmitting electricity.
Who do I buy my electricity from?
An REP sells electricity at retail prices to the general public.
A TDU does not sell electricity to the general public.
What electricity provider do I have the power to choose?
You have the power to choose what REP you would like to buy electricity from.
You do not have the power to choose what TDSP provides your electricity.
Who is responsible for the physical delivery of electricity to your home or business?
An REP does not have any part in delivering electricity to the consumer.
A TDU is responsible for all infrastructure that moves electricity from plants to your home or business.
An REP cannot help you during a power outage.
A TDSP/TDU is responsible for repairing electricity infrastructure that may be damaged during a storm; they will be able to provide you an estimate of when your power should come back on.
Your REP will charge you based on energy consumption, or how much electricity you use. This is called a meter charge.
Your TDU/TDSP will charge you based on your electricity demand, or how much electricity you require at a single time. Your TDSP delivery charges are determined by your electricity demand.
While a deregulated energy market offers Texans more opportunities to save money, it can be frustrating when the power goes out and you don’t know who to call (hint: it’s your utility provider!). And if you’ve ever been confused why your electricity bill shows both a meter charge and a delivery charge, now you know. For more information on charges you may find on your electricity bill, check out our article on how to read your electricity bill.
What Exactly Do Retail Electricity Providers Do?
So now that you know the difference between REPs and TDUs, you may be wondering what these REPs actually do. Well, first and foremost, they purchase wholesale electricity from electricity generators. They also determine retail electricity prices for consumers (you!) to purchase from them. And while they aren’t the ones physically delivering the electricity, they are the ones collecting and paying the charges associated with power transmission. REPs are the folks you sign an energy contract with, and they handle all the administrative processes behind getting electricity into your home.
For more information on delivery charges on your bill, see What Are Electricity Delivery Charges?
Since their business is in selling electricity, however, Retail Electricity Providers don’t have the most honest reputation. Because consumers don’t have the power to choose their TDSP, the Public Utilities Commission of Texas (PUCT) must determine and approve electricity delivery charges from TDSP/TDU providers. On the other hand, due to the intense competition between REPs, the PUCT does not have any oversight into how Retail Electricity Providers price or advertise their electricity rates. This means that REPs can advertise a lower rate on Power to Choose, and charge you a higher rate after you’ve signed a contract with them. Learn more about how REPs advertised electricity rates can differ from the rates they’ll actually charge you.
Why Do I Need to Buy Electricity from a Retail Electricity Provider (REP)?
The wholesale electric market can be extremely volatile. A retail electricity provider steps in and provides demand procurement, buying expertise, and handles risk management.
What's the Difference Between Wholesale and Retail Electricity Prices?
REPs must possess the skill to buy at affordable rates rather than be subject to the real-time electricity marketplace's pricing whims. For example, we've seen wholesale prices go up to as much as $9 per kilowatt-hour.
Yep, retail electricity providers can be "risky business." That low kilowatt per hour rate you may have gotten from a retail electricity provider as a new member may be a price you never see again once that offer period is completed.
Are REPs Different From One Another?
Sure. We are not suggesting that REPs are bad, either. In fact, we explained precisely why customers need them. But Energy Ogre is here to make sure they don't get too greedy and play competitively with your hard-earned dollars.
And keep in mind, all of the electricity they sell is the same. You don't get better electricity from other retail electricity providers. So why should you pay more for it? Shouldn't you get the most energy for the lowest cost and optimize your budget? Become a member today, and let us take care of the rest!
Energy Ogre Acts as Your Agent with REPs
Energy Ogre wants REPs to be successful. We want them to make a reasonable margin as, after all, they are in this business to earn money. But, first and foremost, we want you to be successful.
Our job is to work with REPs to get you the best rate based on how you use energy because we work solely for you. We go to bat on your behalf when it comes to avoiding potential egregious situations. That includes hidden fees, transfers, contract issues, and more.
Interested in learning more? Check out our article Why Pay Energy Ogre $10 a Month?
How Many Retail Electricity Providers Are in Texas?
Because about 85% of Texans live in deregulated areas, it’s not surprising there are a ton of competing power companies. In fact, there are more than 120 retail electricity providers in Texas, most of which target cities like Houston and the Dallas/Fort Worth metroplex.
If you’re overwhelmed by the number of REPs in Texas—don’t be. It’s our job to do all the energy research for you, so you don’t have to worry about finding the lowest plan. We’ll find it and switch you to it automatically. Find out more on our How Energy Ogre Works page.
What Companies Serve as Retail Electric Providers in Texas?
Instead of going through all 120 REPs out there, here’s a list of the top 5 REPs in Texas:
• Reliant: If you’re on the ERCOT grid, Reliant has you covered. They offer fixed-price plans, month-to-month plans, and renewable plans. Not to mention, they offer home security packages, as well.
• Gexa: Communities throughout Texas can rely on Gexa electricity—plus, all residential plans are 100% green.
• TXU: As of 2013, TXU was providing electricity to approximately 10,000 customers. With technological advances like their own thermostat and energy dashboard, TXU is constantly evolving.
• Payless Power: Serving areas all over Texas, Payless touts itself as the #1 Cheap Texas Electricity Company. There’s no deposit required—so you already know you’ll be saving money!
• Constellation: As the #1 producer of carbon-free energy in the U.S., Constellation is tackling the climate crisis one customer at a time. Available in most major Texas cities, this is a great option for any eco-conscious consumer.
For a full list of all registered Retail Electric Providers, check out this resource by the Public Utility Commission of Texas.
How Can I Tell Who Provides Electricity to My Address in Texas?
First and foremost, it’s important to know whether or not you live in a deregulated area. If your address is in a deregulated zone, you have the option to choose who provides your electricity (this is why REPs only exist in deregulated zones). On the other hand, if you live in a regulated area, you can rely on electric utility companies to both provide your electricity and be responsible for the upkeep.
Live in a deregulated area and are ready to never worry about electricity again? Press the button below!
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