Texas Energy Market Model: Lessons for Competitive Success
Change is sparking across the country as states like yours explore what it truly means to break free from the status quo in energy. Here at the Alliance for Competitive Power, we’re not just fascinated with change; we’re passionate about championing it. You aren’t a bystander in the energy world, stuck staring at a bill you can’t influence. Instead, you have the tools, freedom, and knowledge to shape your energy journey. That’s the promise of competitive energy markets and the story Texas tells so well.
Why Competitive Energy Markets Are Shifting the Landscape
If you’ve only ever had one option for electricity, you might wonder what all the fuss is about. In a traditional monopoly, a single company supplies everyone and controls the price. But when competition enters the mix, everything shifts. You, and businesses across the state can choose from multiple suppliers, each vying for your business with better deals, creative options, and improved service.
According to a clear-eyed explainer by Resources for the Future, retail energy providers buy wholesale power and compete to win you over. As of January 2026, wholesale electricity prices are projected to reach approximately $51/MWh, an 8.5% increase from 2025. In this environment, having the power to shop around is more than a convenience, it's a financial necessity.
The Texas Model: Setting the Pace for Energy Choice
Texas has a reputation for doing things its own way. That independent streak is exactly what sets its energy market apart. After opening the marketplace to competition, it didn’t just flatten rates. It kicked off a race to the top, with providers scrambling to offer the lowest prices and best service.
As of early 2026, Texas remains a leader in affordability. While the national average residential electricity rate has climbed to 18.07¢/kWh (a 7.4% jump from 2024), the average rate in Texas sits at 15.45¢/kWh.
The Retail Energy Advancement League highlights this incredible turnaround. Year after year, the Electric Power Supply Association points to falling relative prices in Texas and other restructured states—all real savings for people just like you.
How Competitive Markets Pay Off (It’s Not Just About the Bills)
Your Power, Your Savings: When companies compete, you score. Our grab-and-go summary of FTI study results spells it out: electricity rates in monopoly territories have historically grown significantly faster than in competitive markets.
Choice and Innovation: Competitive retailers are rolling out "Virtual Power Plants" (VPPs) and sophisticated apps that put you in control. As of 2026, VPP enrollment, which coordinates devices like home batteries and EV chargers has reached 30 GW nationally.
Going Greener, Faster: Competition is a decarbonization engine. In competitive regions, emissions have dropped by roughly 35% since 2005, compared to just 27% in monopoly states.
Reliability and Equity: Robust grid managers like ISOs and RTOs keep the lights on. In Texas, the $33 billion 765-kV transmission backbone is currently modernizing the grid to support massive growth from data centers and AI.
Thinking of Change? What States Need To Know
Taking the leap into a competitive market isn’t something you do half-heartedly. Strong oversight by ISOs and RTOs must keep things fair.
Your education matters, when you’re armed with facts, you make better choices. For a closer look at the mechanics, check out our in-depth explanation on how electricity rates are really set. As Constellation Energy puts it, letting customers lead the way delivers both economic and environmental rewards.
Addressing the "Energy Burden"
While competition helps lower overall costs, we must acknowledge that energy bills strain some budgets more than others. Research shows a significant disparity in "energy burden" the percentage of gross household income spent on energy costs.
As of early 2026, the national average energy burden remains around 3%, but for many communities, that number represents a severe financial strain.
Why is Texas a leader? The state’s mix of independent oversight (ERCOT) and fierce competition drives providers to innovate. Since 2021, Texas has added 44 GW of new generation, over 90% of which is solar, wind, and storage.
Will shopping around save me money? In 2026, the answer is increasingly "yes." While monopoly utilities are seeking record rate hikes to cover infrastructure, competitive providers allow you to "lock in" lower rates.
Does competition help the environment? Absolutely. Renewables are expected to overtake coal as the world's largest electricity source by the end of 2026.
Curious about monopoly pitfalls? Read our post exploring the true harms of utility monopolies to see why sticking with the status quo can sting.
Conclusion: Join Us in Shaping the Energy Future
When you open the energy market, you open the door to affordability, innovation, and a cleaner planet. The Texas model shows what’s possible when transparency and competition line up for your benefit. Ready to deep dive into our projects? Head over to our homepage for updates. Together, we can turn possibility into progress, one empowered customer at a time.
