Texas energy glossary
The Texas electricity market runs on vocabulary that is never explained to the people it is used on. Here is all of it, in plain language.
Who does what
- ERCOT
- The Electric Reliability Council of Texas — the independent system operator that runs the grid and the wholesale market for about 90% of Texas load. It sells nothing to customers and sends no bills.
- REP (Retail Electric Provider)
- The licensed company that sells you electricity and bills you for it. This is the only part of the chain you choose in a deregulated area.
- TDU (Transmission & Distribution Utility)
- The regulated wires company that delivers power, owns your meter and restores outages. CenterPoint Energy in Houston. You cannot choose it, and switching supplier never changes it.
- LDC (Local Distribution Company)
- The gas equivalent of a TDU — the regulated utility that physically delivers natural gas and bills the delivery portion.
- Broker
- An intermediary who takes your account to multiple retail providers and is paid by the one you choose. A broker never holds your supply contract; you sign directly with the provider.
- PUC (Public Utility Commission of Texas)
- The state regulator. It approves utility delivery rates, licenses retail providers, registers brokers and handles customer complaints.
- POLR (Provider of Last Resort)
- A designated provider that picks up your service if your retail provider fails or exits the market, so power continues. POLR rates are typically much higher than a contracted rate.
On your bill
- ESI ID
- The Electric Service Identifier — a unique number identifying your meter in the deregulated market. Its presence on a bill is itself evidence that you have retail choice.
- Supply charge
- What your retail provider charges for the energy itself. The competitive, shoppable part of the bill.
- Delivery charge
- The TDU’s regulated charge for carrying power to your meter and reading it. Identical across every retail provider on the same tariff. Not shoppable by anyone.
- Demand charge
- A charge on your highest fifteen-minute average rate of consumption in the billing period, applied to larger commercial accounts. Billed on the peak, not the total.
- Ratchet clause
- A tariff provision under which a single high demand peak sets a minimum billed demand for subsequent months. One unusual afternoon can cost for a year.
- Power factor
- A measure of how efficiently a facility uses the current it draws. Motor-heavy sites can fall below the utility threshold and incur a penalty — a delivery-side charge no supplier can remove.
- Meter multiplier
- A constant applied to readings on larger services metered through instrument transformers. A wrong multiplier scales everything on the bill.
- Load factor
- Average demand divided by peak demand over a period. High load factor means steady, predictable draw — cheaper for a supplier to serve, and usually better priced.
- Load shape
- The pattern of your consumption across hours and days. Suppliers price against it, which is why two accounts with identical annual kWh can be quoted differently.
Plans and contracts
- EFL (Electricity Facts Label)
- The standardised one-page disclosure every Texas retail plan must publish, showing average price at 500, 1,000 and 2,000 kWh, rate type, term, termination fee and recurring charges.
- Fixed rate
- One energy rate for the contract term. Your bill still varies with usage and delivery charges, but the supply price holds.
- Variable rate
- A rate the provider may change month to month with notice. Where expired contracts land you by default, and where rates rise hardest in high-demand months.
- Indexed rate
- A price tied by published formula to a wholesale index. Legitimate for organisations that can absorb monthly variation; not a household product.
- Block-and-index
- A hybrid where part of your expected volume is fixed in blocks and the rest floats at market. Requires someone to decide when to lock each block.
- Holdover rate
- The default month-to-month rate you roll onto when a fixed contract expires and nothing is signed. Typically the most expensive product a supplier offers.
- Evergreen clause
- A term that automatically extends your contract unless notice is given within a defined window. Miss the window and you are committed.
- ETF (Early Termination Fee)
- What leaving a fixed contract before its end date costs. Sometimes a flat amount, sometimes a market-based calculation that can be far larger.
- Volume tolerance band
- The range around your forecast usage within which a fixed price holds. Move outside it and the supplier settles the difference at market — which for seasonal businesses can matter more than the rate.
- Bill credit
- A fixed dollar credit applied only when monthly usage crosses a threshold, commonly 1,000 kWh. Below the threshold the credit vanishes and the effective price can be far above the advertised average.
- Minimum usage fee
- A flat charge applied in any month you use below a set threshold. Proportionally punishing on small bills, which is why apartments are so often mismatched to plans built for houses.
- LOA (Letter of Authorization)
- A short document authorising a broker to request your usage data from the utility. It does not authorise switching or signing anything.
- Forward start
- A contract signed today that begins on a future date — usually the day your current term ends. The mechanism that lets you renew on your own timing.
Market terms
- Deregulated market
- A service area where customers choose their retail provider. Roughly 85% of Texans live in one; municipal utilities, most co-ops and Entergy Texas do not.
- Congestion zone
- ERCOT settles wholesale prices at locations rather than statewide, because transmission constraints mean power can be worth more in one place than another at the same moment.
- Basis differential
- In natural gas, the price difference between a national benchmark such as Henry Hub and the delivery point serving your area. A real component of price, not a fee.
- Transportation tariff
- The gas utility service under which a commercial customer buys the molecule from a competitive supplier and pays the LDC to transport it. Eligibility generally depends on consumption level.
- Predominant use exemption
- A Texas sales tax exemption where more than half the electricity through a meter is used in manufacturing, processing or fabrication. Requires a study, and is claimed less often than it applies.
Still not sure what a line on your bill means?
We read what you are on now, take it to the providers we hold agreements with, and tell you whether it is worth moving. If it is not, we say so.