If you live in the Texas Hill Country and wonder why you cannot shop for electricity the way your friends in Austin or Dallas do, the answer is two words: PEC co-op.
Pedernales Electric Cooperative is one of the largest electric cooperatives in the United States by customer count. It is also a fundamentally different kind of utility from the retail electricity providers (REPs) that dominate the deregulated parts of Texas. Before comparing PEC rates or asking whether you should switch, you need to understand what PEC actually is, what territory it covers, and why the normal switching logic does not apply.
What Is PEC Co-op?
Pedernales Electric Cooperative is a member-owned, not-for-profit electric utility headquartered in Johnson City, Texas. It was founded in 1938 under the New Deal-era Rural Electrification Act, which created a federal lending program to bring electricity to rural areas that investor-owned utilities considered too expensive to serve.
The cooperative structure means that customers are members, not just account holders. Each residential or commercial customer who takes service from PEC holds a membership stake. Margins above operating costs are retained as equity or returned to members as capital credits, which PEC retires (pays out) on a rolling schedule based on the cooperative’s financial position.
As of the cooperative’s most recently published annual figures, PEC serves approximately 370,000 meters across a service territory that spans roughly 8,100 square miles. That makes it one of the ten largest electric cooperatives in the country by customer count, and by far the largest in Texas.
PEC Service Area: What Counties Are Covered
The PEC service area covers portions of fourteen Texas counties, concentrated in the Hill Country west and northwest of Austin. The primary counties include Burnet, Llano, Mason, Gillespie, Blanco, Hays (portions), Travis (portions), Kendall, Kerr, Bandera, Real, Edwards, Kimble, and McCulloch.
Notice the word “portions” for Hays and Travis counties. Those are the two counties where PEC territory and the deregulated Austin Energy / competitive retail market overlap at the edges. If your address falls inside Austin city limits, you are on Austin Energy. If you are in a rural pocket of Travis County or an unincorporated area of Hays County, you may be on PEC instead. The boundary is drawn at the meter level, not at the city or county line, so the only definitive check is entering your address into PEC’s service area lookup tool at pec.coop.
Cities where PEC is the exclusive provider include Fredericksburg, Marble Falls, Kerrville (portions), Dripping Springs, Wimberley, Johnson City, and Llano. Residents in these communities have no option to choose a competing retail electricity provider. PEC is the only game in town.
How PEC Rates Work (and Who Sets Them)
This is the structural point that most shopping guides miss. PEC rates are not set by market competition. They are set by PEC’s elected board of directors, subject to the cooperative’s bylaws, and are not regulated by the Public Utility Commission of Texas (PUCT) in the same way that transmission and distribution utilities are regulated.
Cooperatives in Texas operate under the Electric Cooperative Corporation Act (Texas Utilities Code, Chapter 161), which exempts them from PUCT retail rate regulation. The PUCT does exercise jurisdiction over reliability standards and some interconnection rules, but it does not approve or deny PEC’s retail rate changes the way it reviews requests from oncor or AEP.
In practical terms, that means PEC’s board can adjust rates without filing a full rate case with the PUCT and waiting for commission approval. The check on that authority is member governance: PEC members elect the board, and board members can be removed by member vote. In 2020 and 2021, PEC went through a significant governance dispute that led to contested board elections, which illustrates both the strength and the limitation of cooperative democracy.
Current PEC rate structure (as of the most recently published tariff):
PEC’s standard residential rate, Schedule R, includes a fixed monthly service charge plus a per-kilowatt-hour energy charge. The fixed charge as of the current tariff stands at $20.00 per month. The energy charge is tiered:
- Tier 1: First 500 kWh per month at approximately $0.085 per kWh
- Tier 2: Usage above 500 kWh at approximately $0.105 per kWh
Note: PEC also passes through a Power Cost Adjustment (PCA) that fluctuates monthly based on wholesale fuel and purchased power costs. The PCA can add or subtract a fraction of a cent to several cents per kWh. LightCompanies recommends checking the current PCA on PEC’s website before calculating a monthly estimate, because the PCA during the February 2021 winter storm period moved substantially.
At 1,000 kWh per month, a typical Hill Country household, the math looks like this:
- Fixed charge: $20.00
- Tier 1 (500 kWh x $0.085): $42.50
- Tier 2 (500 kWh x $0.105): $52.50
- Subtotal before PCA: $115.00
- PCA (assume $0.010/kWh as a midpoint estimate): $10.00
- Estimated total: $125.00 per month
That is not a guaranteed figure. PCA variability is real, and PEC also assesses transmission and distribution charges that appear as line items. The $125 estimate is a starting point for comparison, not a billing guarantee.
How PEC Rates Compare to Deregulated Texas REPs
Direct comparison is structurally awkward because PEC is a bundled utility (it handles generation procurement, transmission, distribution, and billing in a single bill) while deregulated REPs operate in a market where transmission and distribution are handled by a separate utility like Oncor or AEP.
To make an apples-to-apples comparison at 1,000 kWh per month for a customer in a deregulated Texas market, consider the competitive offers available on the Power to Choose database as of recent quarterly data. Fixed-rate 12-month plans from mid-tier REPs such as Reliant and TXU typically show all-in effective rates (energy charge plus TDU pass-through) between $0.110 and $0.135 per kWh at the 1,000 kWh usage tier. That translates to $110 to $135 per month before taxes and fees.
PEC’s estimated $0.115 effective rate (dividing $115 by 1,000 kWh before PCA) sits roughly in the middle of that range. Add a neutral PCA and PEC is competitive. In a high-PCA month, PEC can look more expensive than a locked-in fixed-rate REP offer. In a low-PCA month, PEC can look cheaper.
The more relevant comparison, however, is not REPs versus PEC. It is PEC versus other Texas electric cooperatives serving rural areas. Pedernales rates are generally lower than several smaller cooperatives that rely more heavily on purchased power. That reflects PEC’s scale advantage: at 370,000 meters, PEC can negotiate power supply contracts and spread fixed infrastructure costs more efficiently than a co-op serving 15,000 meters.
Capital Credits: The Financial Return You May Be Overlooking
One PEC financial feature that deregulated REP customers do not receive is capital credit retirement. When PEC earns margins above its operating costs, those margins are allocated to members’ capital accounts in proportion to their electricity usage during the year the margins were earned.
PEC retires (pays out) capital credits on a rolling schedule that depends on the cooperative’s financial health and board policy. Historically, PEC has retired capital credits annually, though the amounts per member vary by year. A member who has been with PEC for decades may have accumulated a meaningful balance that gets paid out over time.
This does not dramatically change the rate comparison math for most households, but it is a real financial return that belongs in any honest accounting of PEC’s total cost of service.
Can You Switch Away From PEC?
In almost all cases inside the PEC service area, no. PEC holds an exclusive certificated service area under Texas law. A competing REP cannot string lines into PEC territory and offer service. The deregulation framework that allows competition in urban Texas explicitly excluded most cooperative and municipal utility territories.
The narrow exception involves customers near the geographic edge of PEC’s territory whose property sits in a contested boundary area or who might be able to obtain service from a neighboring utility. These cases are rare and property-specific.
If you are dissatisfied with PEC rates or service, the practical options are:
- Participate in cooperative governance. Vote in board elections. Attend annual meetings. PEC’s 2020-2021 governance disputes showed that member pressure can change board composition and, eventually, policy.
- File a complaint through PEC’s member process. PEC is required under Texas Utilities Code to maintain a complaint process. Complaints that go unresolved can be escalated to the PUCT, which does retain some jurisdiction over cooperative service quality.
- Reduce consumption. Because PEC uses a tiered rate structure, reducing usage below 500 kWh per month drops all consumption into the lower tier. Solar and efficiency investments directly affect your effective rate in a way that a fixed-rate REP contract does not replicate as cleanly.
- Check for distributed generation options. PEC has an interconnection tariff for rooftop solar. The net metering terms matter significantly and should be reviewed against current PEC policy before sizing a system.
What the PUCT Complaint Data Shows
LightCompanies tracks PUCT complaint data as one input into provider profiles. A methodological note applies here: the PUCT complaint database is structured primarily around licensed REPs, not cooperatives. PEC, as a cooperative operating outside retail competition regulation, does not appear in the PUCT’s REP complaint rankings the same way that Reliant or Gexa Energy does.
PUCT does publish complaint records for cooperatives under its limited jurisdiction. The volume of PEC-related PUCT complaints is low relative to PEC’s customer base, but that figure requires careful interpretation. Cooperative customers may have lower awareness that PUCT is an option for escalation, which suppresses reported complaint rates independent of actual service quality.
The Better Business Bureau profile for Pedernales Electric Cooperative shows a rating and complaint history that LightCompanies does not treat as a primary signal given the BBB’s methodology limitations, but it is one additional data point available to researchers.
The Core Takeaway for Hill Country Residents
PEC co-op is not a retail electricity provider you chose or can easily leave. It is a member-owned utility with exclusive service rights in its territory, rate-setting authority that bypasses PUCT retail review, and a tiered rate structure that sits roughly in the middle of the Texas competitive market range at typical residential usage.
For residents asking whether to switch away from PEC: the question is moot for most of the service territory. The more productive question is whether you are using the membership rights the cooperative structure gives you, whether your consumption level takes full advantage of the lower Tier 1 rate, and whether distributed generation economics make sense given current PEC interconnection policy.
For researchers and policy observers comparing Texas electric cooperatives: PEC ranks as one of the financially stronger cooperatives in the state, with scale advantages that translate into rates that are competitive against comparable rural service contexts. Its governance has faced documented stress, which is a structural risk inherent to the member-elected board model.
LightCompanies covers deregulated Texas REPs in detail in the provider index. For readers who land in PEC territory, this explainer is the relevant starting point. For those on the boundary, use the address lookup and confirm your utility assignment before assuming deregulated options apply.