[EN] Texas vs Georgia: Two opposite models in the U.S. — and where Brazil really fits in

A comparative look at deregulation, vertical integration, and hybrid energy markets

🔹 1. One country, multiple models

The U.S. power sector is not governed by a single market design. Instead, each state chooses its own model — which means different structures coexist across the country.

Two states represent opposite ends of the spectrum:

• Texas, with a fully deregulated and competitive market operated by ERCOT.
• Georgia, with a vertically integrated utility model, led by Georgia Power.

But where does Brazil fit in this comparison? It turns out, the answer is more nuanced than many might think.

🔹 2. Texas – Full deregulation and retail choice

Since its 1999 reform, Texas has implemented:

• Full legal unbundling of generation, transmission, distribution, and retail,
• Independent companies for each segment (no shared legal entity),
• A competitive retail market available to all consumers,
• Grid and market operations managed by ERCOT, which:

💡 Result: high competition and market signals — but increased exposure to operational and price volatility, as seen in the 2021 winter storm.

🔹 3. Georgia – A vertically integrated, regulated utility

Georgia represents the traditional model:

• Georgia Power, part of Southern Company, is vertically integrated, handling generation, transmission, distribution, and supply within the same legal entity,
• There is no retail choice for consumers,
• Tariffs and investment plans are regulated by the Georgia Public Service Commission (PSC).

💡 Result: more predictability and centralized control, but less competition and innovation.

🔹 4. Brazil – Legally unbundled, strongly regulated

Brazil is often misunderstood as “vertically integrated,” but that’s not accurate.

Since the reforms of the 1990s:

• Brazil has enforced legal unbundling: generation, transmission, distribution, and commercialization must operate under separate CNPJs (legal entities), even if they belong to the same holding group.
• The grid is operated by the ONS (National System Operator),
• Market coordination is handled by the CCEE (Electricity Chamber of Commercialization),
• The free market (ACL) is expanding but still limited to large consumers — residential users must remain with their default distributor for now,
• Regulation is centralized under ANEEL, a federal agency.

📌 Structurally, Brazil is closer to Texas in legal terms, but with stricter central oversight and more gradual liberalization.

🔹 5. Side-by-side comparison

🔹 6. Why this comparison matters

Understanding where Brazil really stands is important for:

• U.S. professionals seeking to work or invest in Latin America,
• Brazilian policymakers shaping the future of the free market,
• And anyone comparing global approaches to grid management and market liberalization.

Brazil's model offers a unique mix: private-sector participation, legal unbundling, and strong regulatory oversight — sitting somewhere between Texas and Georgia, but on its own terms.

🔹 7. Closing thoughts

In the final article of this series, I’ll reflect on what Brazil can learn from the U.S. — and what the U.S. could learn from Brazil.

🔎 What’s the ideal balance between competition and reliability in power markets?

💬 Could a U.S.-style retail choice system succeed in Brazil?

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