Beatrice Lang
Texas has a deregulated retail electricity market, which means Retail Electricity Providers (REPs) compete for your business. This can lead to lower prices but also creates a confusing market with many plans and biased websites. When shopping for electricity in Texas, it is important to compare offers apple-to-apples, including all delivery charges. A Fixed-Rate plan is one where the rate terms don't change over the contract period, offering more budget certainty. You can also choose a prepaid plan, where you pay upfront for additional kWhs, or a plan that provides energy from renewable sources. To find the best plan for your home or business, you can use a platform that connects directly to your utility data and filters by term length, provider, renewable energy, and other factors.
| Characteristics | Values |
|---|---|
| Energy plan websites | Over 90 REP websites sell plans directly, but they are overwhelming and most plans are overpriced. |
| PowerToChoose.org | A website created by the Texas PUC where REPs can list offers for free, so they often post their cheapest plans. |
| For-profit broker websites | Countless websites mimic Power To Choose in function and/or name, but with less accountability. They offer "free" advice but sell plans at above-market rates. |
| Energy charges | Energy charges are sometimes quoted separately from TDU charges, which are "passed through" without markup. |
| Fixed-rate plan | A plan where the rate terms don't change over the contract period. A 12-month fixed-rate plan is recommended for most homeowners as it balances pricing and hassle. |
| Indexed-rate and variable-rate plans | These plans tend to be more expensive and it's harder for consumers to predict their costs. |
| Average electricity cost | The average Texan pays ~12 ¢/kWh, while savvy shoppers pay less than 9 ¢/kWh. |
| kWh usage | The average home uses ~14,000 kWh annually, resulting in significant cost differences. |
| Reasons for overpaying | Unawareness of the option to switch providers, uncertainty about service reliability, misleading websites, and plan lapses. |
| Green energy | Plans that provide energy from renewable sources like wind or solar can help lower your carbon footprint. |
| Prepaid plan | You'll receive a warning when you're close to consuming all the electricity in your plan, then you can choose to pay upfront for additional kWhs or conserve usage. |
| Service area | Retail electric providers may not offer services in every town or city in Texas, so consider your location when choosing a provider. |
| Cost per kWh | Electricity use is measured in kilowatt hours (kWh), and providers share their rates in this unit. |
| Switching providers | If your rates are being raised or you've found better deals or a company you trust more, it may be a good time to switch. |
| Business electricity rates | These rates are typically lower than residential rates as they don't include transmission and delivery fees, and businesses often qualify for lower rates due to higher power usage. |
| ESIID | Refers to the unique identifier for your electric meter, which helps with enrolling customers, switching providers, and metering consumption. |
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What You'll Learn
Compare rates and plans from trusted providers
Texas has a deregulated energy market, which means that energy suppliers compete to offer the best electricity rates and customer service. This means that you can save money on your energy bills and find an energy plan that fits your electricity usage.
There are a few ways to compare rates and plans from trusted electricity providers in Texas. Firstly, you can use a website such as ChooseTexasPower.org, where you can search, compare, and choose your energy provider. This website updates its rates daily, so you can be confident you are getting the best deal. You can also use the Choose Energy marketplace to compare your area's best energy plans and rates. This website also allows you to explore options based on energy provider and contract length.
Another option is to use Texas Power Guide, which claims to be the only 100% transparent site for shoppers. This website does not sell electricity but instead searches for plans and does the math to find additional savings.
When comparing rates and plans, it is important to always compare offers "apple-to-apples" with all delivery charges included. A Fixed-Rate plan is one where the rate terms do not change over the contract period, and a 12-month fixed-rate plan is generally recommended for most homeowners as it offers the best balance of pricing and predictability. Variable-rate plans exist but tend to be more expensive and harder to predict.
It is also worth noting that Texas energy plans include a percentage of renewable energy, but some providers offer 100% green energy plans, such as Gexa Energy’s Eco Saver Plus 12 and Eco Saver Plus 24.
Finally, it is important to be aware of teaser rates and hidden charges, as well as biased websites that may cost you more money.
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Understand the difference between fixed-rate, indexed-rate and variable-rate plans
Texas has a deregulated retail electricity market, which means that Retail Electricity Providers (REPs) compete for your business. This can lead to a range of plans being offered, including fixed-rate, indexed-rate, and variable-rate plans.
Fixed-rate plans
Fixed-rate plans are the most popular option for electricity customers. With a fixed-rate plan, you'll get a set rate for electricity that won't change throughout the length of your contract, regardless of what happens in the electricity market. This means that you can rest assured that your rate will remain stable, even if electricity prices rise. Fixed-rate plans are typically tied to a contract, which can last anywhere from 6 to 36 months, with 12-month plans being the most common. These plans often come with cancellation fees, so be sure to consult your provider before signing up.
Indexed-rate plans
Indexed-rate plans are tied to the trading markets for electricity, meaning that your rate will change monthly with fluctuations in the market. There are no upper or lower limits on indexed-rate plans, so while your rates could decrease, they could also increase significantly. Indexed-rate plans are highly volatile and unpredictable, making it difficult for the average consumer to budget for their energy costs. In 2021, the Texas Public Utility Commission ruled that retailers could no longer offer indexed plans to residential and small business customers due to the unlimited upside risk.
Variable-rate plans
Variable-rate plans offer flexibility, as they are often short-term agreements with no long-term contracts or cancellation fees. However, this comes with the trade-off of market volatility, as the monthly energy rate may be based on wholesale electricity costs. Without a locked-in rate, your monthly bill could fluctuate significantly with changes in energy prices, making budgeting more challenging. Variable-rate plans are a good option if you're not ready to commit to a long-term plan or if you want the freedom to switch plans or providers easily.
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Know your service area
Texas is a large state, and retail electric providers may not offer services in every town or city. Knowing your service area is essential when shopping for electricity in Texas.
The Electric Reliability Council of Texas, or ERCOT, manages the flow of power to 26 million Texas residents, 8 million locations, and 90% of the Texas grid. However, ERCOT does not set electricity rates in Texas; instead, rates are set by various electricity providers. The Public Utility Commission of Texas (PUCT) oversees ERCOT's operations, and they manage the Power to Choose website, where Retail Electricity Providers (REPs) can list their offers for free.
When shopping for electricity, it is important to compare offers "apple-to-apple," including all delivery charges. Business electricity rates are advertised without transmission and delivery fees (TDU), while residential energy plans include these fees. Additionally, most businesses use more power than a typical home, so they qualify for lower rates.
If you are moving within Texas, you can choose a new REP and energy plan. You may be able to keep your existing contract if your new address falls within your current provider's service area. If not, you won't be charged an early termination fee, but you must provide proof of your move.
To find the best electricity rates and plans in your service area, you can use websites like ChooseTexasPower.org, where you can search, compare, and choose your energy provider by entering your ZIP code.
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Consider switching to a green energy provider
Texas has a deregulated retail electricity market, which means that Retail Electricity Providers (REPs) compete for your business. This can be beneficial to consumers as it often leads to lower prices. However, it can also be overwhelming, with many sites not offering their best rates without a promo code, and some even misleading shoppers into overpaying.
When shopping for electricity in Texas, it's important to compare offers "apple-to-apples", ensuring that all delivery charges are included. A Fixed-Rate plan is one where the rate terms don't change over the contract period, and a 12-month fixed-rate plan is generally recommended for homeowners as it offers the best balance of pricing and predictability.
If you're considering switching to a green energy provider, there are a few things to keep in mind. First, understand your current plan and any potential early cancellation fees. You may need to pay your balance in full before terminating service, or you may have time to pay it off after switching. You can then start researching green energy providers in your area. Gexa Energy, for example, offers 100% green residential plans with a 60-day Happiness Guarantee. Choose Energy also allows you to filter and sort plans by what you want, including green energy.
When choosing a green energy provider, be sure to read the fine print and understand the specific payment outline of the plan, including any hidden charges. You can also use a site like Texas Power Guide, which helps you find the best price by searching plans and doing the math for you. By taking the time to research and compare plans, you can find a green energy provider that meets your needs and helps you achieve your energy goals.
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Be aware of hidden charges and teaser rates
Texas has a deregulated retail electricity market, which means Retail Electricity Providers (REPs) compete for your business. This can lead to lower prices, but it also creates a confusing array of plans and biased websites that end up costing consumers more money.
Electricity shopping in Texas is a minefield of teaser rates and hidden charges. Most shopping websites, including the PUCT's "official" PowerToChoose.org, only allow you to search and sort plans at a single usage point, typically 500, 1000, or 2000 kWh per month. This is problematic because your monthly electricity usage varies throughout the year, often doubling from spring/fall lows to summer peaks. Knowing this, many retail electric companies offer "low rates" at commonly searched usage levels, but charge much higher rates for other usage levels.
To avoid teaser rates, it's important to understand your electricity usage and how it varies from month to month. Tools like an electricity bill calculator can help you see your rate per kWh based on your usage. Be sure to read the plan summary and details carefully, and always compare offers "apple-to-apples" with all delivery charges included. A fixed-rate plan, where the rate terms don't change over the contract period, is generally recommended for most homeowners as it offers the best balance of pricing and predictability. Indexed and variable-rate plans tend to be more expensive and harder to predict.
Be wary of free" offers, as they are generally a red flag. For example, if a plan offers free nights and/or weekends, the weekday rate is likely inflated to compensate. If a plan is heavily advertised on TV and radio, it is probably more expensive to cover the cost of advertising. Plans that offer incentives like a fancy new thermostat, cashback rewards, or an electric puppy are also likely to be more expensive overall.
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Frequently asked questions
You can shop for electricity in Texas by comparing the best rates and plans from trusted providers. Websites like PowerToChoose.org and ChooseTexasPower.org can help you find the perfect energy plan based on your preferences.
When choosing an electricity provider in Texas, consider the service area, cost per kWh, and whether they offer fixed-rate plans. You may also want to look for providers that offer energy from renewable sources if you want to lower your carbon footprint.
A fixed-rate plan is one where the rate terms don't change over the contract period, offering more budget certainty. It may be a good option if you want to guard against energy price fluctuations. However, indexed and variable-rate plans also exist and may be more suitable for some consumers.
To find out if you're being charged the right amount, check the fine print on your past bills, which will show the average price you paid for electric service that month. The average Texan pays around 12 ¢/kWh, but some shoppers pay less than 9 ¢/kWh.
