The move toward deregulating electrical utilities and opening the market to new competition has resulted in a great deal of new investment and the growth of existing companies. The largest energy market in the United States is Texas.

At the beginning of 2002, a deregulation law went into effect in the state, allowing customers to choose their electrical provider while setting prices to keep existing utilities from engaging in unfair practices to continue their monopoly. One of the new players in the Texas market is Direct Energy. Direct Energy is now the largest energy and home services retailer in North America.

Here Comes Direct Energy

Its parent company, Centrica, was founded in England and entered the North American energy market in Canada. As smaller, established energy companies were added to the Centrica family, Direct Energy became the name that described the Texas markets brand.

Both West Texas Utilities Retail Energy and Central Power & Light Retail Energy of Texas have joined the Direct Energy family. While Texas is only one of its markets, Direct Energy was able to profit from the elements of the state deregulation law that set a minimum price for established utilities and allowed new electrical companies to set lower prices.

By acquiring the established assets of existing utilities and starting new competitive companies, Direct Energy was able to get the best of both worlds. Additionally, the minimum price set by Texas was based on the higher expenses incurred by gas-burning power plants rather than the lower costs of coal-burning plants. The purpose was to create a level playing field for competitors as well as removing the advantage of the coal-burning plants which are more damaging to the environment.

The family of companies which includes Direct Energy is in the natural gas business. Their ability to generate electricity using their gas resources without having to compete in price against coal-burning plants was an asset in their growth. Direct Energy provides power to both business and home customers.

One of their services is a set-price electrical contract that maintains the same price for the life of the contract no matter what price is set by the market. A scandal involving forged energy contracts locking customers into long-term deals was revealed in 2003. Both Direct Energy and one of its affiliates were charged and fines were paid. Since that time, the companies have overcome the bad publicity and grown.