Retail Energy Providers in Texas: How REPs Work

A Retail Energy Provider (REP) is the company that sells you electricity in deregulated Texas. REPs purchase wholesale power through the ERCOT market and resell it to residential and commercial customers.

What your REP handles:
- Setting your electricity rate (fixed, variable, or indexed)
- Billing you monthly (including TDU delivery charges)
- Customer service for account and billing questions
- Contract terms, renewals, and early termination fees

What your REP does NOT handle:
- Power delivery (that is your TDU)
- Outage restoration (call your TDU, not your REP)
- Meter reading (TDU manages Smart Meters)

Texas has over 100 PUCT-licensed REPs. Some are large national companies. Others are small Texas-only operations. All must meet the same licensing and financial requirements set by the Public Utility Commission of Texas.

REPs profit from the spread between wholesale and retail electricity prices. They buy power cheap on the ERCOT market and sell it to you at a markup.

The business model:
- Wholesale price: ~3-5¢/kWh average (fluctuates hourly)
- Retail price: ~12-16¢/kWh average (your fixed or variable rate)
- TDU delivery: ~5-7¢/kWh (passed through to you at cost)
- REP margin: ~2-4¢/kWh on the energy portion

Risk management is the key. REPs hedge their wholesale purchases months in advance. When they offer a 12-month fixed plan at 10¢/kWh energy, they have already locked in wholesale contracts to cover that commitment.

Variable-rate plans shift more risk to you. The REP passes wholesale price changes through monthly. Cheaper in spring and fall. Expensive in summer when ERCOT wholesale prices spike above $100/MWh during heat waves.

Every REP operating in Texas must hold a PUCT certificate. The commission does not hand these out casually.^[1]

PUCT certification requires:
- Financial viability review (proof of capital and creditworthiness)
- Technical capability assessment
- Customer service standards compliance
- Bond or letter of credit ($100K-$500K depending on customer count)
- Background checks on company officers

Ongoing requirements:
- Annual financial reporting to PUCT
- Compliance with customer protection rules
- Electricity Facts Label (EFL) accuracy
- 7-day rescission period on all residential contracts
- Disconnection notice procedures

PUCT maintains a public list of certified REPs at puc.texas.gov. If a company is not on the list, do not sign up. PUCT can fine, suspend, or permanently revoke a REP's license for violations.

With 100+ REPs, choosing comes down to five factors.

1. Rate at your usage level
Check the Electricity Facts Label at 500, 1,000, and 2,000 kWh. Your rate depends on how much you use. A plan cheap at 2,000 kWh might be expensive at 500 kWh due to base charges.

2. Contract length
12-month fixed plans balance price stability with flexibility. 24-36 month plans lock rates longer but may carry higher early termination fees.

3. Early termination fee (ETF)
Typical range: $100-$200. Some plans have no ETF. Read the EFL.

4. Renewable content
Plans range from 0% to 100% renewable. Green plans are often competitively priced in Texas thanks to abundant wind and solar.

5. Company reputation
Check PUCT complaint data and online reviews. Some REPs have excellent customer service. Others have aggressive renewal tactics.

Compare REP plans side by side at ElectricRates.org.

Switching retail energy providers takes 5 minutes online. No one comes to your house. Your power stays on.

The process:
1. Find a better plan at ElectricRates.org
2. Click to enroll with the new REP
3. Provide your name, address, and ESID (meter number)
4. Your new REP submits a switch request to ERCOT
5. Switch completes within 1-3 business days

What happens behind the scenes:
- Your new REP notifies ERCOT of the provider change
- ERCOT updates your meter assignment in their system
- Your old REP sends a final bill
- Your new REP starts billing at your new rate

No interruption. Same TDU. Same wires. Same meter. Same reliability. The only change is who bills you and at what rate.

7-day right to cancel: Texas law gives you 7 days to cancel any new residential contract without penalty.

Dozens of REPs serve Texas, but a few dominate the market.

Largest REPs by customer count:
- TXU Energy — Oldest Texas brand, premium plans, Vistra subsidiary
- Reliant Energy — Houston-based, NRG subsidiary, wide plan selection
- Gexa Energy — Budget-focused, NextEra subsidiary
- Direct Energy — National brand, diverse plan types
- Green Mountain Energy — 100% renewable plans since 1997

Value-focused REPs:
- 4Change Energy — Low-cost plans, charitable donations
- Frontier Utilities — Competitive fixed rates
- Pulse Power — Simple plan structures
- Chariot Energy — Solar-focused plans

Big brands often charge more for name recognition. Smaller REPs can offer lower rates with less marketing overhead. All are PUCT-licensed and all use the same TDU wires. Your power quality is identical regardless of REP size.

PUCT takes consumer complaints seriously. If your REP misleads you, overbills you, or violates contract terms, you have recourse.

How to file a complaint:
1. Contact your REP first — many issues resolve with a phone call
2. File with PUCT at puc.texas.gov or call 1-888-782-8477
3. Include your account number, contract details, and specific complaint

PUCT can:
- Order refunds for billing errors
- Fine REPs for deceptive practices
- Require contract modifications
- Suspend or revoke REP licenses

Common complaints:
- Unexpected rate increases after contract expiration
- Misleading plan advertising (rate at wrong usage level)
- Difficulty canceling or switching providers
- Unauthorized enrollment ("slamming")

PUCT publishes complaint data by company. Check these stats before choosing a REP.