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EXECUTIVE SUMMARY
Updated: 10/01/05    Source: EC Power
The Texas electricity market opened to competition on January 1, 2002 with approximately 5.7 million accounts available to choose an energy service provider, referred to as a competitive retailer (CR). As part of the market opening, all accounts that had not chosen a new provider were switched to the utility's affiliate company (AREP). The Texas retail electric market has continued to develop and mature since the last Scope of Competition in Electric Markets in Texas Report. By most objective measures, Texas has the most robust, well-functioning retail market in the United States. The Center for the Advancement of Energy Markets' Retail Energy Deregulation Index ranks Texas as the number one competitive retail electric market in the North America, and number three in the world, based on twenty-two key attributes related to retail competition. New providers continue to enter the marketplace and develop new and innovative products for customers. Customers are becoming increasingly aware of their options in the marketplace, and are continuing to examine their options from various providers. As of September 2004, over one-million retail customers were taking service from a non-affiliated provider, and a total of 1.5 million switch requests had been processed by the Electric Reliability Council of Texas (ERCOT). While increasing natural gas and electricity prices have been a challenge to the development of the marketplace, market forces appear to be working well to provide competitive prices to customers.

The Energy Reliability Council of Texas (ERCOT) was created by legislature and is governed by the Texas Public Utility Commission. ERCOT's scope includes both the wholesale and retail markets within Texas. The retail market consists of 7 utilities, referred to as Transmission Distribution Service Providers (TDSP), and approximately 44 active CR's. In comparison to other deregulated markets, Texas supports the ESP (CR) Consolidated Billing model with a central clearinghouse. The energy service provider invoices their customers based on a TDSP invoice transaction and an ERCOT usage transaction. ERCOT's role is the customer registration agent and clearinghouse for all usage transactions. This combination of point-to-point transactions and clearinghouse transactions requires an emphasis on transaction management.

Municipalities and Cooperatives are currently not required to offer competitive electricity in their service areas today. However, customer and political pressure will continue to build for consumers in those service areas to enjoy the lower electricity costs and increased number of products the rest of the state consumers receive. Municipalities and Cooperatives are currently evaluating their role in the new competitive electric market.

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