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Texas Electricity Savings:

  Texas business owners have the opportunity to save up to 20% on their monthly electricity bill

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  Home owners in Texas can also take advantage of Texas deregulation

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How Is Electricity Sold At Retail?

The retail side of electricity rates involves the final sale of power from an electricity provider to an end-use consumer. These sales range from the service for a large manufacturing facility to small businesses and to individual households.

In every state, regardless of whether they allow electricity rates retail competition or not, supply for end-use customers is obtained either through the open, competitive electricity rates wholesale market, from utility-owned rate-based (cost-plus) generation, or some combination of the two.

In states where full retail electricity rates competition (often called "retail choice") is provided, customers may choose between their incumbent utility supplier and an array of competitive suppliers, as opposed to being a captive customer to a single provider. Competitive retail suppliers provide a variety of service plans and electricity rates that give consumers and businesses flexibility in their energy purchases. They may also offer services to hedge against electricity rates fluctuations, more choices for alternative energy resources, and newer energy efficiency projects, among others. These opportunities allow consumers and businesses to choose the electricity rates and services that best meet their needs.

In most states providing retail electricity rates competition, customers who don't choose a supplier are served by their incumbent utility through a service called "provider of last resort" (POLR - also sometimes referred to as standard offer service, SOS). The POLR or SOS supplier will then secure its needed power on the wholesale market through a competitive electricity rates bid process.

Retail electricity rates markets are regulated at the state level. State regulatory commissions are most often called the state "Public Utility Commission" or "Public Service Commission." In every state, these commissions regulate a distribution utility's costs and rate of return for use and upkeep of the distribution system.

In retail choice states, the commissions approve any alternative competitive supplier before they can serve customers. The commissions also oversee a POLR or SOS utility's power procurement, and approve the results of the process if the process was fair.

In states not offering electricity rates retail competition, the commissions regulate the expenditures of the monopoly utilities by allowing a rate of return on most costs. In these states, utilities are vertically-integrated and may construct, own and operate power plants - at the ratepayers' expense. To curb inefficiencies that occur under any monopoly system, many states with vertically-integrated utilities require utility power resources to be acquired through a competitive bid process - similar to how government contracts are filled.

http://www.epsa.org/industry/primer/?fa=sold


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