Texas Electricity Plans: The Ultimate Guide

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If you’re trying to understand the smart way to shop for electricity plans in Texas, you’ve come to the right place.

There are a lot of electricity shopping sites in Texas including power to choose. Unfortunately, they don’t have smart capabilities. And with so many choices, they just add to the confusion.

So, if you’re new in Texas, moving, or switching providers, this guide is here to help. Everything that you need to know to find the best electricity plans in Texas.

See why a smart shopping tool like EnerWisely, is the way to go to find the best deal. In minutes, you can automatically compare hundreds of plans based on your real consumption to find the right one. Shop smart with EnerWisely and let the savings begin.

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What Is an Electricity Plan and why Texas Has the Power to Choose?

About Power to Choose and Texas Deregulation

Texas is one of the few states in the nation with a so-called “deregulated” energy market. This means that there is an open market for many electricity companies to step in and compete for customers.

In practice, this has led to lower energy prices for Texans. That’s why we provide smart tools and energy knowledge to work the system and squeeze out value.

From electricity plans to electric bills to electric companies, our guide covers all aspects of the Texas energy market. Learn how Texas residents can navigate it to their own benefit.

What is an electricity plan

An electricity plan is a contract between a customer and a retail electricity provider (REP) to provide services in return for a fee.

Electricity plans will usually be for a certain fixed period of months and specify things like how much the customer will pay for electricity as well as where the company should be providing it.

Electricity contracts are usually for a predetermined period of time. However, once your first contract expires, you may default to a month-to-month plan.

The length of your contract is only one of many considerations you’ll have when choosing a plan.

Types of Electricity Plans

In Texas, consumers have hundreds of electricity plans to choose from. With over 40+ retail electricity suppliers (REP), offering multiple types of plans it is important to know what those are. In this section we will cover the options you have to choose from fixed rate plans, free electricity at certain times, 100% renewable energy, and even prepaid electricity.

Be aware that low tech electricity shopping sites like Power to Choose publish electricity rates that might seems great. However, without understanding the type of plans and how they work you might find yourself with irritating surprises. In other words, what seems low rates end up being high bills. For this reason, Power to Choose became known as the Power to Confuse.

So here is a helpful section about what each type of plan is about to help you smart up your power to choose.

Fixed Rate Electricity Plans

The most straightforward type of plan. A fixed rate means that your price per kWh will not change for the duration of the plan. This can be for just a few months or a couple of years.

These rates are right for customers who dislike wondering how much their electric bill will be from month to month.

You’ll always know in advance, which makes it easier to budget and plan for upcoming weather events like heatwaves or blizzards.

The downside of fixed rates? There are times when demands drops and electricity prices fall. Customers who are on a fixed rate contract won’t see lower prices. And they may end up paying a higher kWh price than other customers in those cases.

All of this means that, while fixed rates are the most simplistic and predictable, they may not necessarily be always your cheapest option.

Variable Rate Power Plans

A variable-rate electricity plan means that the price of electricity per kWh will change from month to month.

An electricity company will analyze historical data to decide the upcoming month’s price per kWh and post it in advance: that’s the price customers will pay for that month.

In Texas, electric companies are required to post these rates in advance, so customers get at least one month’s warning of what their rates will be.

This allows customers the flexibility to shop for the best plans and even take advantage of periods of extremely cheap power.

Despite this, variable-rate plans are definitely a risk.

Variable prices can change from month to month, so customers are susceptible to market and economic forces outside of their control.

A great example is during summer heatwaves when residents everywhere start relying on air conditioning all day.

During these times of temporarily high usage, a customer’s variable price per kWh could dramatically rise.

Indexed Rate Light Plans

An indexed rate plan is similar to a variable-rate plan, in that they will each charge a different price from month to month.

The difference is that, while variable-rate plans are priced at the discretion of the energy company, an indexed rate plan is tied directly to the cost of natural gas.

A variable-rate plan would not only consider the cost of natural gas but also other factors such as delivery fees and how many of their customers might not pay their bills.

The formula for an indexed rate plan will be decided on and published in advance, so customers who follow the price of natural gas will be able to predict the cost of their energy.

When deciding between indexed rates and variable rates, customers are deciding if they’d rather take their chances with the company’s pricing or with the natural gas market.

Prepaid Service Plans

In a prepaid plan, consumers will often pay in advance for electric service. The rate will be determined on a day-to-day (or even less) basis. REPs will use technologies like smart meters to measure the amount of electricity used.

As the name of the plan suggests, prepaid plans often require upfront payment. Payless Power is one of Texan’s preferred electricity providers offering prepaid electricity.

The rates of a prepaid plan will generally still be based on the fixed, variable, and indexed rate models.

Time of Use Electricity Plans (Free Nights Free Weekends)

Time-of-use plans consider when you’re using electricity instead of just how much.

Some of the most popular are free nights, free weekends, and free night and free weekends electricity plans.

The goal of a time-of-use plan is to make customers to use power when demand on the grid is low. This means late at night or during weekends.

Time-of-use plans can lower your bill, but only if you shift your energy usage to match the lower-demand times.

On one hand, free and reduced-price electricity could dramatically lower your power bill. On the other hand, if you keep using power during high-demand times, these plans could increase your bill.

One of the most famous providers of time of use energy plans in Texas was Griddy. They used pass their wholesale prices to customers. Unfortunately, during the Texas winter storm the wholesale price went crazy and they are not longer in business.

Clean Energy and Green Energy Plans

Some of the top electricity providers offering renewable energy plans and competitive electricity rates in Houston, Dallas, and throughout Texas include:

And if you are thinking about going green, take your free carbon footprint assessment with EnerWisely. At no cost, no risk, and within minutes, you will learn the environmental impact of your energy use.

EnerWisely also helps companies from small businesses to large corporations, understand and reduce their carbon footprint. We can also automate your business’ scope 2 carbon account accounting.

Our super accurate carbon accounting integrating time-based energy attributes gives you itemized and standard calculations. Yes, like Turbotax. You get to decide the best reporting strategy to cost optimize your decarbonization work.

Also, EnerWisely helps everyone in the community take climate action and for companies to offer sustainability perks to employees. After all, reaching net zero will require everyone to do their part and strong sustainability culture.

Types of Electric Companies

The term “electric company” can take on new meanings in a deregulated market like Texas.

This is because there are multiple companies providing different services to the market. It starts with energy generation, then distribution, to the infrastructure and finally sales. Each step of the journey generally involves a different company.

Ultimately, customers pay the energy provider (REP) for their electricity bills. However, the entire energy market relies on several different kinds of electric companies including:

Electricity Generators

In the first place, electricity is generated at coal plants, nuclear reactors, wind farms, solar farms, or other means.

The companies that perform this service are called generators. Generators’ focus is on generating power efficiently and at low cost.

In a deregulated energy market, generators typically do not sell directly to consumers. They compete to sell their power to the Retail Electricity Providers (REPs).

Retail Electricity Providers (REPs)

REPs are the companies in between the generators and you. Their job is figure out the most efficient way to sell electricity to consumers.

They buy electricity directly from the generators and then sell it and distribute it to consumers.

REPs are also known as light companies. In a deregulated market, providers are in constant competition with one another.

The competition starts in finding the cheapest source of electricity. Then, they determine the most efficient way to deliver it to customers.

This is reflected in their prices: the more confidence on their future purchase price the more likely they are to offer lower rates and attract more customers.

REPs don’t own the cables that deliver power to consumers. For this, REPs rely on the utility companies.

Utility Companies

The electric utility company puts the infrastructure in place for power to reach your home or business.

It’s their powerlines and poles that are responsible for bringing the energy to your home. It is the utility company who you’ll need to contact if you ever experience a power outage.

A deregulated energy market requires utility companies that offer the delivery service to all providers.

Otherwise, every light company would need to install and maintain its own powerlines. This would be hard and expensive.

Because the utility company offers the infrastructure equally to every provider, it is easier for them to enter the market. This is intended to create competition and drive prices down.

Texas Electricity Utility Phone Numbers

You can find your local utility’s phone number on your electricity bill, or check the list below:

Centerpoint Energy (Houston area) 1-800-332-7143
Oncor (Dallas Forth Worth and scattered Central Texas) 1-888-313-4747
AEP Texas Central (Corpus Christi, Brownsville, South Texas) 1-866-223-8508
AEP Texas North (West Texas) 1-866-223-8508
Texas New Mexico Power (Friendswood and scattered Central/North Texas) 1-888-866-7456

How to Compare and Choose Electricity Plans in Texas

The simplicity other markets enjoy when searching for electricity plans has its pros and cons.

On one hand, not having to shop for the best company means saving time and hassle. In most cases, it also makes your electricity prices more predictable and manageable.

The tradeoff that Texans have made in exchange for this convenience is lower prices via increased competition.

On average, Texans pay 24% less for commercial power and 13% less for residential electricity compared to the national average.

The competition is working to drive down prices. So how can you best take advantage of this favorable marketplace?

So, let’s start by understanding the unit system of how electricity is measured. From here, you can get an understanding of your kWh needs and compare rates on your consumption.

Here are five tips when selecting an energy plan in Texas and get the best deal:

1. Understand your Energy Consumption History

To find the right plan for your home you will need to compare based on your consumption profile. Your past energy use is a good indication of how much energy you’ll need in the future.

Look at some previous energy bills to get a sense of your effective price per kWh. Also notice what kinds of fees you’re being charged.

Keep in mind that energy use fluctuates a lot from month to month as the outdoor temperatures changes.

Peak summer months mean constant air conditioning usage, which will certainly spike your bill.

Don’t compare July to October and expect accurate results.

If you’re new to the area and have no past energy bills to examine you have options. One is to look at some of your most common appliances and see how much energy they use.

And there is a way automate the analysis of your energy consumption history and get periodic home energy reports. And you must do is create your free account with EnerWisely. It will link the data of your home’s smart meter to instantly show usage changes throughout the year.

2. Decide if Your Energy Needs are Flexible

One of the great things about a deregulated energy market is the number of solutions that REPs can come up with to solve electricity needs.

There are several plans available in Houston, Dallas, and Arlington, which all offer discounted kWh rates during non-peak hours.

It’s worth checking if you’re able to shift your schedule around and use more energy when providers offer free electricity.

For example, if you have electric vehicles, you might charge them at night and get a free nights electricity plan. If you can adjust, this could save you thousands per year on your energy costs.

3. Keep in Mind Historical Electricity Market Trends

It may be that you’re moving in the middle of the summer. Companies charge more for electricity during summer months because demand is high.

These kinds of spikes can affect fixed-rate plans and variable-rate plans.

Before you enroll in a fixed-rate plan, see if fixed-rate electricity prices are lower during off-peak months.

If so, it may be worth it to pay for a variable-rate plan for a few months. Once demand falls and you can lock in a lower fixed rate for a longer term.

Here are some of the most recent event and trends that explain why Texas Electricity prices were so high this summer and impacted the forecast include:

4. Plan for Long- and Short-Term Events

Most electricity plans in Texas (and elsewhere) are fixed-rate plans. This means that they won’t move much, if at all, when demand spikes or major weather events shake up the market.

These kinds of plans offer some attractive stability. However, if you’re serious about saving money, it could be in your best interest to play a short-term strategy.

Is a longer-term fixed-rate plan or a short-term variable-rate is best for you? It depends. With the right tools, you can determine what works best in your specific case.

5. Use a Smart Electricity Plan Shopping Tool - Smart Up your Power to Choose

There are currently more than 125 REPs in Texas all competing to bring you the cheapest energy. Don’t settle with the first one you come across.

Use a smart shopping site like EnerWisely and compare electricity companies and Texas energy plans available in your zip code.

Look at things like their customer satisfaction, company history, and if possible, something like a sample bill.

The sample bill can give you a great sign of just how well the company communicates with their customers. How clearly are charges marked and explained?

Is their bill easy to read or overly complicated?

Checking before choosing an REP could save you headaches down the line.

Three important things to know when comparing Electricity Plans

What is a kWh?

Power is measured using an international standard unit of measurement called a joule.

A watt is defined as one joule of energy per second. So, a device that requires 400 watts is burning 400 joules of energy for every second it’s working.

Electricity companies measure power sold in kilowatts, which equals 1,000 watts. They’ll also translate these into hours instead of seconds to keep the numbers more manageable.

To summarize: REPs measure the amount of energy your home or business is using on a per-hour basis. These are called kilowatt hours. kWh is the primary unit of measurement that your electricity provider uses to calculate your bill.

Be-aware of the difference between advertised rates and effective rates

The most important consideration will be the effective price per kWh.

However, be careful, the advertised and the effective price per kWh can be two very different things.

This is because some electric companies, create tricky energy rates that offer super low rates at specific usage levels.

However energy consumption varies through the year. Once your usage doesn’t meet the plan requirements, your electricity bills will spike.

Why should you shop for electricity plans with a better alternative to Power to Choose?

That’s where traditional websites to compare plans and rates like Power to Choose come short. Those sites are unable to consider your daily and hourly energy consumption changes.

Fortunately, a smart electricity plan shopping site like EnerWisely automate all these steps. And you will quickly find the plan that is compatible with your consumption variations.

EnerWisely.com gives you the confidence of choosing the right plan for you to lower your bills and save money.

The Best Way to Compare Electricity Rates

Let’s start by saying that there are advertised electricity rates and effective rates. The effective rate of your electricity plan refers to price per kWh that you pay.

This is based on your consumption and includes energy charges and other components.

Unfortunately, some electricity providers have made your power to choose, their power to confuse you. As a result, 90% of Texans believe that they are overpaying for electricity.

What happens is that most consumers still don’t understand their real energy cost. For this reason, they only focus on advertised electricity rates when comparing electricity plan.

Why is EnerWisely the best way to compare and shop electricity plans in Texas?

To properly compare plans, you need to check if the changes in your usage will trigger extra charges or discounts. And that is exactly what EnerWisely does for you.

EnerWisely analyzes your electricity consumption in 15-minutes intervals. This super precise analysis accurately determines which plans work for you. EnerWisely also generates easy to understand matching scores from o to 100.

The matching score reflects the compatibility between electricity plans and your consumption profile. The higher the matching score the better a plan works for you and the lowest the effective rate.

And because there are not good or bad electricity plans but poor fit, EnerWisely evaluates all types of plans. We don’t want you to miss out on savings. But if a plan is bad for you and triggers extra charges you will know.

Now that you know the best way to compare and find the right plan. Now, let’s understand the different components that make up your electricity bills.

Features to Consider When Choosing an Electricity Plan in Texas

Ultimately, finding the best plan for you depends on many factors. For example, where you live and when you’re signing up. But most importantly, it depends on the unique changes in your electricity usage over time.

So, take a comprehensive approach to comparing energy plans. Try and look at electricity plans beyond their posted price per kWh.

We recommend evaluating these features when choosing the best energy plan:

Electricity Rate (Price per kWh)
Contract Length
Type de Electricity Plan
Customer Satisfaction Reviews
Extras, rewards, and incentives

Three main features to watch when comparing plans

Electricity Rate (Price per kWh)

This is a key factor of the cost you’ll see on your electric bill each month. It can also be the most volatile and difficult to predict. So it’s best to go with a company that consistently shows lower rates over time.

Contract Length

Your contract length would ideally match the period of time you’re using the building (home or business). You’ll commonly see contracts for 12 or 24 months. Don’t sign a contract for longer than what you need.

Conversely, be careful not to sign a contract that is too short. If your contract expires, you may suddenly find yourself in the variable-rate market. And it might lead to a big shock when you open your next bill.

Type de Electricity Plan

Besides the rate, the type of plan you have will affect your bill more than any other factor.

Fixed-rate plans are the most stable and generally the least expensive, but that is not a universal principle.

It is better to consider all types when comparing plans. In the end, what matters is finding what works best in your case.

Two additional features of electricity plans that can make a difference

Customer Satisfaction Reviews

Keep in mind that customer reviews and electricity reliability are two different things. The truth is that reliability is related to the electric infrastructure of the utility companies. Since all electricity providers use the sale cables and poles, the reliability of the electricity supply is the same regardless of which light company you choose.

Now, reviews and ratings are a different story, and they reflect how good a company is serving their customers. To see the official company reviews and ratings, check the public utility commission of Texas (PUCT).

You can also check google reviews. A flood of negative reviews over a sustained period may be a red flag.

Decide for yourself if customer reviews are a reason to miss on a potentially cheaper plan.

Extras, Rewards & Incentives

Finally, look to see if the REP is offering any kind of incentive or reward for switching to them.

They may also have special programs for consumers who use energy in unique ways. Examples of what electricity companies consider special include those who:

use a lot of electricity
don’t use much power
use their energy during off-peak hours
Use more at nights
Use more during weekends

When Electric Companies Compete, Texans Win with Lower Bills

Though the cost of energy in Texas is lower than in other states, customers still need to be smart to avoid overpaying.

While choosing the right plan could save you thousands over a year. Choosing the wrong plan could see you locked into a high rate for 12 months or more.

So use a smart shopping tool like EnerWisely to screen plans from multiple companies. Get super accurate effective cost estimates based on your consumption. This is the best way to find the best deal quickly and easy.

Get peace of mind finding the plan that is compatible with you and avoid irritating surprises.

We hope this guide helped you better understand the ins and outs of the Texas electricity market. Now you can take advantage of the value that competition provides.

Go ahead and find out if you’re overpaying on your bill. Get the electricity plan that works for you and save money with EnerWisely’s Best Deal Finder.