For years, the electricity utilities in Texas were monopolies. That changed when the state's legislature deregulated the industry. Before this, a single utility would provide electricity service—including sales, transmission, and distribution—to an entire area of the state.

One Fortune 500 utility did just that for more than 1.6 million customers. When the utility split, the deregulated part became the area's incumbent Retail Electricity Provider (REP), responsible for customer selling and marketing. The....

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