REP vs. Utility: Who Actually Provides Your Electricity in Texas?

One of the most common points of confusion for Texas business owners is this: who is actually providing your electricity? You see CenterPoint or Oncor on your bill, but you signed a contract with a company called something else entirely. Are they the same company? Who do you call when the power goes out? Who do you negotiate rates with?

The answer lies in how Texas deregulated its electricity market. In a deregulated market, the company that sells you electricity is not the same company that delivers it. Understanding this distinction is fundamental to managing your energy costs effectively.

The Three Companies Behind Your Electricity

In a deregulated Texas city, three separate entities are involved every time you flip a light switch:

Your REP (Retail Electricity Provider)

Your REP is the company you have a contract with. They are your electricity supplier — the company that buys power on the wholesale market and sells it to you at a retail rate. Your REP determines your energy rate, your contract terms, and your billing. When you "shop for electricity" or "switch providers," you are switching REPs.

There are over 100 active REPs in the Texas market. Some you may have heard of — TXU Energy, Reliant, Direct Energy, Constellation. Many others are smaller regional or commercial-focused providers. The variety is the whole point of deregulation: competition drives better rates and service.

Your TDU (Transmission and Distribution Utility)

Your TDU is the company that owns the physical infrastructure — the power lines, transformers, poles, and meters — that delivers electricity to your building. Unlike REPs, TDUs are regulated monopolies. You cannot choose your TDU; it is determined by your geographic location.

The major TDUs in Texas are:

Your TDU charges delivery fees that appear on your electricity bill, but they are passed through by your REP. These fees are regulated by the Public Utility Commission of Texas (PUCT) and are the same regardless of which REP you choose. You cannot negotiate TDU charges.

ERCOT (Electric Reliability Council of Texas)

ERCOT operates the Texas power grid. It does not sell electricity or own any power lines. Instead, it manages the wholesale market, balances supply and demand in real time, and ensures grid reliability. Think of ERCOT as the traffic controller — it coordinates the generators, TDUs, and REPs to keep the system running.

You will rarely interact with ERCOT directly, but their operations affect the wholesale prices that ultimately influence the rates your REP offers.

Who to Call For What

This is where the confusion becomes practical. When something goes wrong — or when you need something done — knowing which company to contact saves you time and frustration:

Why This Distinction Matters for Your Business

You Can Only Negotiate Part of Your Bill

When you shop for commercial electricity rates, you are only comparing the REP's energy supply charges. TDU delivery charges — which can be 30-50% of your total bill — are the same no matter which REP you choose. Understanding this prevents you from expecting unrealistic savings from a REP switch alone. Our guide on reading your commercial electricity bill breaks down which charges are which.

Switching REPs Does Not Affect Your Power

Because your TDU handles delivery and your REP handles supply, switching REPs has zero impact on the physical electricity coming to your building. The same wires, the same meter, the same reliability. The switch is purely administrative — it typically takes a single billing cycle and happens with no interruption in service.

This is important because many business owners avoid switching out of fear that they will experience a service disruption. That fear is unfounded. The electrons do not know or care which REP you are paying.

Your TDU Determines Your Rate Class

Your TDU assigns your meter a rate class based on your service type, voltage level, and usage characteristics. This rate class determines which TDU delivery rates apply to your account. Commercial customers typically fall into a different rate class than residential, and large commercial customers (high voltage, high demand) have different rates than small commercial.

If you believe you are in the wrong rate class — for example, you are being billed at commercial demand rates but your usage profile suggests you should be on a different tariff — this is something your REP or broker can help you investigate with the TDU.

Common Mistakes Business Owners Make

• Calling the TDU to negotiate rates. TDU rates are regulated and non-negotiable. If you want a better deal on your electricity, talk to REPs or use a broker.
• Thinking CenterPoint or Oncor is their electricity provider. These are TDUs — they deliver power but do not sell it. Your REP is the company on the first page of your bill and the contract you signed.
• Ignoring TDU charges when comparing rates. Two REPs may offer identical energy rates, but if your TDU charges are high, the total cost is still high. Always compare all-in cost, not just the energy rate. Our guide to lowering commercial electricity bills covers how to evaluate total cost. Understanding fixed vs. variable rates also helps compare options.
• Calling the REP for a power outage. Your REP cannot restore power — they do not own the infrastructure. Call your TDU directly. They have outage reporting lines and restoration crews.

How a Broker Navigates This for You

Part of the value of working with an energy broker is that they handle the complexity of the REP/TDU relationship on your behalf. A broker understands which charges are negotiable, how TDU rate classes work, and which REPs offer the best terms for your specific usage profile and TDU service area.

Instead of calling five different REPs, comparing apples-to-oranges quotes, and trying to decipher TDU tariff schedules, you get one point of contact who does all of that for you — typically at no direct cost, since brokers are compensated by the REP, not by you.