Don't quote me on this, but here is my understanding of how it works. The transmission grid is still managed in a public utility type fashion. However, the power generators sell their power in a stock market type of system, with prices being updated every 15 minutes on the market, 24/7. They thus have to compete with each other on price as demand changes throughout a typical day. The retail sales companies are what us customers interact with. They generally provide electricity plans with a constant $/kWh rate, while they themselves are trading on that “stock market” all day long, buying 15-minute chunks of electricity at whatever the best rate is at the moment. Of course, I'm sure this buying and selling is all automated by pre-written software algorithms.
In the end, we have some pretty good electricity rates. I believe the national average is around 12¢/kWh, while we have plans for under 6¢/kWh. Switching retail providers is super easy as well, kind of like switching cell phone companies. If you are no longer under contract, you just sign up with a new company and your old plan will automatically be canceled, with no lapse in service during the transition.
Anyway, who knew that competition is good, right?
Texans can browse and purchase the plans available in their area with the statewide exchange website, www.powertochoose.org. (You can type in 77002 for the zip code to see an example of plans in Houston.)
And the really neat part about it is that, if you're environmentally-conscious, you can sign up with Green Mountain Energy and pay a premium for your electicity -- because Green Mountain (who is also a generator) produces their electricity via environmentally-friendly windmills scattered all over West Texas.
But wait! It gets better! Green Mountain Energy is also a retailer. And they buy their electricity on the same market everybody else does. Meanwhile, their windmills just feed their juice into the grid -- not direct to their retail customers.
This inventive arrangement makes everybody happy. Green Mountain's oh-so-green customers get to pay a premium for (they think) environmentally-friendly windmill generated electricity. Green Mountain's owners (the Wyly Brothers) collect a premium price on generic electricity, while selling their windmill juice direct to the grid at wholesale prices. And the rest of us don't have to pay for crazy inefficient environmental schemes.