Energy deregulation is a relatively new phenomenon in Texas. Prior to deregulation, one electric company handled the three basic components of your electrical service:

• Generation - the production of electricity
• Transmission & Distribution - the delivery of electricity across poles and wires to your home or business
• Retail Sales - the sale of electricity to end users, coupled with customer service and billing functions

The generation of electrical power was deregulated in Texas in 1995, bringing with it a greater variety of efficient power source options, such as natural gas, water, wind, solar, nuclear power and coal.

The transmission and distribution of electricity across poles and wires is still regulated by the Public Utility Commission of Texas (PUCT) to ensure the safety and reliability of electric service. Transmission and distribution services are provided by local wires companies that are responsible for the maintenance of poles and wires, as well as for responding to power outages and emergencies.

The retail sale of electricity was officially deregulated in 1999, and opened the Texas energy market for competition beginning in January 2002. Retail sales of electricity are provided by companies known as Retail Electric Providers (REPs), which are certified to do business by the Public Utility Commission. REPs purchase energy from generation sources and then sell the energy directly to consumers and businesses. REPs provide customer service and billing functions, and they compete for consumer business through lower rate offers.

There are two types of REPs - Affiliate Retail Electric Providers (AREPs) and Competitive Retail Electric Providers (CREPs).

• AREPs were part of the original electric company that generated and sold electricity in your area. Now AREPs only sell electricity and provide customer service.
   
• CREPs are certified by the PUC and sell electricity to homes and businesses and provide functions like customer service and billing. Customers who choose to switch from an AREP to a CREP have the possibility of saving money with more competitive pricing.

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