The Big Picture: Deregulation
Texas electricity is deregulated, meaning you choose your light company instead of being assigned one. In most states, one company controls everything — the wires, the power generation, and your bill. Texas split this up in 2002 PUCT Deregulation Info.
Why it matters: Competition between light companies means you can shop for better rates. But it also means understanding who does what — because three different companies are involved in getting lights to your house.
Three Players in Texas Electricity
1. ERCOT — The Traffic Cop
ERCOT (Electric Reliability Council of Texas) manages the Texas power grid. ERCOT doesn't generate electricity or deliver it to your house. ERCOT makes sure supply matches demand every second of every day ERCOT.
What ERCOT does for you: ERCOT manages the switch hold system (if you owe a previous light company, ERCOT blocks new service until you pay). ERCOT also coordinates when lights get turned on or off.
Real Talk:
ERCOT is why prepaid can't bypass a switch hold. Nobody can turn on your lights if ERCOT's system shows you owe money to a previous company.
2. TDU — The Delivery Company
TDU (Transmission and Distribution Utility) owns the physical wires, poles, and transformers. Four TDUs cover most of Texas: Oncor (Dallas/Fort Worth), CenterPoint Energy (Houston), AEP Texas (West Texas), and TNMP (various areas).
What TDUs do for you: TDUs maintain the infrastructure and respond to outages. When a storm knocks out power, the TDU sends crews to fix it — not your light company.
TDU charges appear on your bill as "TDU delivery charges." These fees are the same no matter which light company you pick. You can't avoid them.
Real Talk:
TDU charges are why "electricity rates" are misleading. A plan advertising 9¢/kWh still costs 13-14¢/kWh after TDU fees.
3. REP — Your Light Company
REP (Retail Electric Provider) is who you actually pay. REPs buy electricity wholesale and sell it to you. REPs set the rates, handle customer service, send bills, and decide deposit requirements.
60+ REPs compete in Texas, which is why rates and deposit rules vary so much. TXU Energy might want a $400 deposit from you while Payless Power wants $0 — same house, different company rules.
Real Talk:
When we say "light company," we mean REP. That's who you choose, who you pay, and who runs your credit check.
How Electricity Rates Work
Your total light bill has three parts: the energy charge (what the REP charges), the TDU delivery charge (fixed by your TDU), and base fees (service charges, metering fees).
| Charge Type | Typical Cost | Who Sets It |
|---|---|---|
| Energy Charge | 8-20¢ per kWh | Your REP (varies by plan) |
| TDU Delivery | 4-5¢ per kWh | TDU (PUCT-approved) |
| Base Fees | $5-15/month | REP + TDU |
Example calculation (1,000 kWh used, 10¢/kWh plan, Oncor TDU):
- • Energy: 1,000 kWh × 10¢ = $100
- • TDU delivery: 1,000 kWh × 4.5¢ = $45
- • Base fees: $10
- • Total bill: $155
Important:
The "rate" light companies advertise (10¢ in this example) is ONLY the energy charge. Your actual cost per kWh is higher once TDU fees are included.
Reading the EFL (Electricity Facts Label)
Every Texas electricity plan has an EFL — a standardized document showing exactly what you'll pay. The PUCT requires this PUCT Consumer Info.
Average Price per kWh (500, 1000, 2000 kWh)
Shows your total cost at different usage levels. ALWAYS check the 1,000 kWh column — that's average Texas household usage.
Energy Charge
The per-kWh rate the REP charges. This is the number you see in ads.
TDU Delivery Charges
Fixed fees from your TDU. Same across all plans in your area.
Base Charge
Monthly service fee. Typically $5-15. Some prepaid plans skip this.
Now that you understand how it works, find a plan that works for you.
Understanding the system helps you make better decisions. If you need lights without a deposit, we can help. We check multiple light companies to see if you qualify for $0 deposit on a traditional plan (8-13¢/kWh). Many people find at least one option. Can't promise it'll work, but it's worth checking. If no traditional option works, prepaid lights are always available — $40-75 to start, guaranteed approval, same-day service. Enter your ZIP code to see every option available in your area.
Key Concepts Explained
Fixed-Rate vs Variable-Rate
Fixed-rate plans lock in your rate for a set term (12 months, 24 months). Your rate won't change even if wholesale electricity prices spike. Variable-rate plans change monthly based on market prices. Variable plans can be cheaper in summer but risky in winter.
Related: Fixed vs Variable rates explained
kWh (Kilowatt-Hour)
kWh is how electricity is measured. One kWh = running a 1,000-watt appliance for 1 hour. Average Texas household uses 1,000-1,200 kWh per month. Summer months (AC running) can hit 1,500-2,000 kWh.
ESIID (Electric Service Identifier)
ESIID is your address's unique ID in the ERCOT system. Every Texas address has one. Light companies use your ESIID to verify service history and check for switch holds. You can find your ESIID on any electricity bill or by calling your TDU.
Related: What is ESIID and why do I need it?
Why Understanding This Matters
- • You can't avoid TDU fees, so focus on comparing energy charges between REPs
- • Advertised rates are misleading — always check the EFL's "Average Price per kWh at 1000 kWh" column
- • Switch holds come from ERCOT, not individual light companies, which is why prepaid can't bypass them
- • REPs compete for your business, so shopping around actually saves money (unlike regulated states)
Consumer Advocate
I cut through the BS. Light companies hide their real rates in the fine print. I show you what you'll actually pay.
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This guide is for educational purposes only. For official regulations, visit the Public Utility Commission of Texas. NoDepositLights.com is powered by Compare Power (PUCT License BR190020).
