Retail Market Structure

In Texas, you choose your electricity provider from dozens of competing retailers. In Georgia, you have no choice: Georgia Power is your only option. The difference is retail restructuring, and whether it benefits consumers remains genuinely contested after 25 years of evidence.

Retail restructuring separates the sale of electricity to end customers from the physical delivery. The distribution utility still owns the wires and maintains the poles, but competitive retailers buy wholesale power and resell it to customers at prices they set. Roughly 15 states plus the District of Columbia have restructured retail markets. The rest maintain the traditional vertically integrated model where one utility handles everything.

The Texas model. ERCOT's retail market has over 100 retailers offering hundreds of plan types: fixed-rate, variable, time-of-use, green energy, free nights, free weekends. Customer switching rates exceed 30% annually, the highest in the US. Average retail prices are below the national average.

The cautionary tale. During Winter Storm Uri (2021), customers on variable-rate plans saw bills exceeding $10,000 for a single week as wholesale prices hit $9,000/MWh. The same market that delivers low average prices can deliver catastrophic price spikes to customers who bear wholesale price risk.

Is retail competition better for consumers?

On average, probably. For vulnerable consumers, not necessarily. In well-functioning markets like ERCOT, average retail prices run below the national average, and several studies credit competition with mid-single-digit percentage savings; others find no consumer benefit at all. Competition also shifts risk: customers who choose poorly (high-markup plans, variable rates during crises) can pay far more than they would under regulated rates. The distributional question matters as much as the average.

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