With so many electricity plan options in Texas, navigating the market can be like roping a wild stallion.
Before renewing your contract, compare providers and plans to ensure you get the best offer. Texas has several electric plans, including prepaid, fixed, and variable rates.
Variable Rate
In deregulated Texas, you have various options when shopping for an electricity plan. You can buy a fixed-rate plan where the energy portion of your bill stays the same per month over the contract term (3, 6, 24, or 36 months). You may also choose a variable rate where the kilowatt-hour price changes depending on market prices and the discretion of your retail electricity provider.
Some providers offer prepaid energy plans. These are similar to prepaid phone plans, where you pay upfront for the data or minutes you need and are not bound to a contract. These can be great for people who want to avoid signing a long-term contract or are between permanent homes.
Many people choose variable rate plans because they can enjoy savings when market rates are low. These savings are reflected in their monthly electricity bills and can increase over time.
However, the kWh prices can climb when demand for electricity spikes during hot summers and cold winters. You must be able to adjust your usage during these times to avoid higher prices. Moreover, these plans often come with a minimum usage level. If you cannot meet this requirement, your provider may charge you a fee or disconnect your service.
Fixed Rate
In Texas, the Electric Reliability Council of Texas (ERCOT) manages one of the nation’s most extensive electricity grids. The non-profit organization works with most retail energy providers to help manage power flow and distribute electricity across the state. However, ERCOT does not set Texas electricity rates. Individual retail electricity providers do.
The most popular Texas electricity plans include fixed-rate contracts. These plans offer consistency and security by avoiding price fluctuations based on market conditions or supplier choices. However, not all “fixed” plans are the same. Some are variable rate plans that change monthly based on the kilowatt-hour prices charged by suppliers and a formula. Other plans include indexed rates that fluctuate daily, based on a published index such as natural gas prices.
Other types of fixed-rate plans include those with tiers or bill credits. These plans have different pricing structures but allow customers to choose a fixed-rate plan that fits their energy usage and budgets.
To find the right plan for your home, gather information and read more on your average energy usage. Then, compare the options available in your area by focusing on rate type and contract terms. An online comparison tool helps you sort through the many variables affecting Texas electricity rates.
Green Energy
Texas is unique among states in deregulating the electricity market, giving energy consumers various options. In addition to traditional fixed-rate plans, many retail electric providers offer variable rate, index, prepaid, and green energy plans.
Choosing a green energy plan allows Texans to support renewable initiatives and reduce their environmental impact. Unlike fossil fuels, which are finite resources, renewable energy sources such as wind and solar continue to produce kilowatt-hours even after being consumed by customers.
These kilowatt-hours are then added to the state’s electricity grid and sold to customers, who can choose plans with varying levels of renewable content. Every Texas electricity plan currently contains some percentage of renewable energy as indicated on the Electricity Facts Label.
As a consumer, the most important decision you will make when selecting a new energy plan is your contract term length and early termination fees (if applicable). Most residential Texas electricity plans run from 12 to 36 months. Consider a time-of-use energy plan, which rewards you with lower rates or free periods during off-peak hours. However, you should be aware that the energy generated by these plans is less reliable than that from traditional generation sources. This is particularly true if you live in an area an investor-owned utility serves.
Prepaid
In deregulated Texas, there are many options for electricity plans. The best option for your home depends on your budget, energy usage patterns, contract length, and rate type preferences. Some people like the consistency of fixed-rate plans, while others like to shop for the lowest rates each month with variable-rate plans that shift based on market conditions. Prepaid plans are another popular choice, and they often do not require a credit check or upfront security deposit.
With prepaid plans, your monthly allotment of electricity is paid for upfront before you use it. Your provider will send you daily balance updates, and you can refill the plan online, over the phone, or in person at local payment stations. Prepaid plans are a good option for people who want to monitor their electricity usage and avoid paying for unused power. You can also use time of use (TOU) rates by using household appliances during off-peak hours to save money on your power bill.
To find the best Texas electricity plan for your home, gather information about your average monthly energy usage, then compare providers’ rates and plans on the marketplace. Be sure to consider your preferred contract term and rate type, and make note of any fees that may be applied (like a late charge) or available energy-saving rebates.
