Electricity deregulation in Texas was the result of the coming into force of Texas Senate Bill 7 on January 1, 2002. According to the law, deregulation is to be phased in over several years.

As a result, most Texas power customers can choose their electricity service from a wide variety of "Retail Electrical Providers" (or REPs) The "local wires" utility in the area still maintains the power lines, only the companies generating electricity were affected.

Since 2002, approximately 85% of commercial and industrial customers in Texas had switched power providers at least once.