There are few things more confusing in Texas than the electricity supply system. There are a number of different components involved including companies that create electricity, ones that deliver it, and ones that sell it. Making your way through this obstacle course of electric companies and the electric supply system is challenging to say the least.

In this article, we’ll try to clear things up for you. We’ll take a look at the different types of electric supply companies in Texas and inform you about how electricity gets from point A to point B. Let’s get started!

Before you can understand how electricity makes its way to your home, you should first know where Texas gets it from. Like most states, a majority of Texas’ electricity comes from fossil fuels such as coal and gas. However, Texas is proud to be one of the nation’s leaders in terms of electricity produced from renewable resources and produces more wind power than any other state. Here’s a layout of where Texas’ electricity comes from.

• 47.4% comes from natural gas
• 20.3% comes from coal
• 20% comes from wind power
• 10.8% comes from nuclear power
• 1.1% comes from solar power
• 0.2% comes from hydropower
• 0.1% comes from biomass

Texas is very diverse and innovative in where it gets its electricity from and is constantly striving to find newer and better ways to produce it.

If you thought that the breakdown of where electricity comes from in Texas was confusing, fasten your seatbelt. In deregulated parts of Texas, there are three different types of electric supply companies and they all go by different names and do different things. However, they all work together to make sure that your home and business receive electricity.

Power generating companies are the companies that create electricity from fossil fuels, renewable resources, and nuclear energy. In the competitive parts of Texas, there are over 650 power-generating companies. This number doesn’t include the 500 plus solar companies or the 150 wind farms that produce electricity.

Transmission and Distribution Utilities (TDUs) are the electric supply companies that make sure electricity gets to your home. TDUs own the power lines, electric poles, electric meters, and all the wiring that connects your home or business to the next component we’ll discuss, the retail electric providers. If you have a power outage or a mechanical problem, your TDU is the one who repairs it.

Retail electric providers (REPs) are the electric supply companies that sell electricity to you. These companies are the ones that you sign up with for your monthly electric supply, and it’s where your power bills go to. REPs work in conjunction with TDUs and power generators to create, sell, and deliver electricity to your home or business.

Now that you know all the players in the game, let’s look at the overall electric supply system in Texas.

1.    Electricity Gets Created

Let’s start at the beginning with the power generating companies. Power generating companies create electricity out of natural gas, coal, wind, the sun, water, or nuclear energy. There are over 1,000 of these power-generating companies in Texas and their only goal is to create electricity as cleanly and efficiently as possible.

2.    Electricity is Sold to REPs

Next, power generating companies take their electricity and sell it to REPs at the wholesale price. They then sell it to you, the customer, at an inflated price, just like any other good or service would be.

3.    Electricity is Delivered by TDUs

After you sign up for an electricity plan with a REP, they work with TDUs to make sure that electricity makes it from them to you. TDUs are predetermined by the REP that you sign up with, so you won’t have the option of choosing your own TDU.

4.    You Pay Your REP

Based on how much electricity you use in your home or business, your REP sends you a bill at the end of each month. That is, of course, unless you signed up for a prepaid plan, in which case you pay for the electricity at the start of each month. At any rate, however, your payment goes to the REP, who then uses the profits to pay the TDUs and the power generating companies for their roles in the electric supply system.