According to August data from the U.S. Energy Information Administration (EIA), Texas’s average electricity rate is 15.61 cents per kWh, 8.2% lower than the national average of 16.94 cents per kWh. However, Texas has higher average monthly usage than most other states, making the average electric bill more expensive. Using the 2023 average usage of 1,146 kWh per month and the current average Texas electricity rate of 15.61 cents per kWh, we can estimate that the average electricity bill in Texas is approximately $178.89 a month.
Since Texas has a deregulated energy market, you can secure a lower rate in areas like Houston, Dallas and Arlington when you choose an electricity plan that meets your usage needs.
“As a deregulated state, Texas lets customers choose not only their provider but their plan, contract terms and more,” said Shawn McLaughlin, founder and chief executive officer of Emporia Energy, a smart-technology energy management company.
With hundreds of options available, you can take control of your energy costs by finding a plan that aligns with your lifestyle and energy usage patterns.
How Much Do Texans Pay for Energy a Month?
According to the EIA, Texans consumed an average of 1,146 kWh per month in 2023. Using this data and more recent rate averages from the EIA, we can estimate that with an average rate of 15.61 cents per kWh and 1,146 kWh per month, the average Texas electricity bill is around $178.89 per month. That means Texans pay an average of approximately $2,146.68 per year.
Keep in mind that these numbers are only estimates using historic usage averages from the EIA. Your actual energy costs will vary depending on where you live, your chosen provider and plan, as well as your home size and appliances used.
Texas vs. the National Average
Although the average energy rate in Texas is 8.2% lower than the national average, the state’s higher overall energy consumption leads to more expensive monthly bills. Texas uses approximately 29% more electricity than the U.S. average, according to October 2024 data from the EIA. The overall higher consumption is primarily due to the frequent use of air conditioners in summer and space heaters in winter to maintain comfortable indoor temperatures.
What Factors Affect Electricity Costs in Texas?
Several factors affect Texas electricity rates, including the state’s extreme weather, the complex deregulated energy market and the cost of fuel sources.
“Energy prices are very difficult to predict. As with most markets, many factors come into play that affect supply and demand. This is especially true of Texas electricity prices,” explained Allan Schurr, chief executive officer of Enchanted Rock, a backup power supply company.
Climate and Weather Patterns
The Lone Star State is known for its extreme weather conditions, from scorching summers to unpredictable winter storms. When temperatures rise, Texans run their air conditioner units nonstop to stay cool, increasing demand on the grid. According to Energy Star, nearly half of the average American’s electric bill goes toward heating and cooling.
Meanwhile, six out of 10 households have electricity-powered heaters for their homes, per the EIA. Electric heaters mean energy demand — and therefore electricity rates — can peak when winter storms drive Texans to raise the temperature on their heaters.
Power outages caused by extreme weather also directly impact energy rates. Winter Storm Uri in February 2021 is the most extreme example of this in recent years, having caused the largest outages on record, according to the Texas Comptroller.
Deregulated Energy Market
The Texas deregulated energy market provides you with the power of electric choice, meaning you can pick an electricity provider instead of being dependent on a single utility. This choice creates competition among suppliers to offer the best prices and services. However, it also means that energy rates are subject to the fickle nature of supply and demand. Shifting demand based on seasonal weather changes directly impacts electricity prices. And growing population centers can also increase energy demand and cost.
However, you can use your power to choose to compare top electricity providers and potentially secure lower energy rates. Deregulation has also led to the creation of various plan types to fit a range of energy needs. Plan types include fixed-rate, variable-rate and renewable energy plans. Your monthly electricity costs will depend on the plan and provider you choose.
Read the electricity facts label (EFL) to understand what each plan actually offers. The EFL details the energy rate, delivery charges, possible discounts and average rates across key usage levels (500, 1,000 and 2,000 kWh). The EFL can help you identify the best plan for your unique energy needs.
Fuel Costs and Energy Sources
Natural gas makes up approximately 57% of the fuel for the Texas electric grid, according to the EIA. Meanwhile, renewable energy sources make up 25% of the state’s electricity fuel. Other fuels include coal and nuclear power. Electricity rates increase when fuel costs rise. Unsurprisingly, the cost of natural gas has an outsized impact on energy rates because it makes up such a large portion of the total fuel mix.
Renewable fuels such as wind and solar power have lower generation costs. However, they are weather-dependent. This dependency means the grid can only use these sources to offset the cost of natural gas-sourced energy when the sun is shining or the wind is blowing.
Regional Variations in Texas Electric Bills
Electric bills vary by region because of the availability of electricity and the potential cost of delivering electricity incurred by utility companies.
Urban vs. Rural Areas
Isolated, rural areas tend to have more expensive energy, with rural households spending about 40% more of their household income on energy than urban households. This increase is likely due to several factors, including lower population density, distance from power sources and the cost associated with delivering that energy.
Major cities and urban areas benefit from lower transmission costs because they tend to reside closer to generators. This proximity means faster, more efficient delivery and lower costs for transmission. The size of your home also matters. A large country home will likely have a higher average electricity usage than a one-bedroom apartment in the city. Because you pay a rate per kilowatt-hour, a large home with high usage will inherently incur more expensive monthly energy costs than a small home with low usage.
TDU Service Areas
Transmission and distribution utility (TDU) delivery fees will also impact your average energy bill. These TDU charges cover the cost of delivering energy to your home and managing the local grid. Each deregulated utility company charges a different delivery fees based on the expenses incurred to maintain the local grid and transmit power to homes and businesses in that utility service area. Because of this, your total energy costs will vary depending on which service area you reside in.
Most utility companies charge a monthly base charge and a fee per kilowatt-hour, meaning you’ll pay more in delivery fees as you use more electricity per month. You can find your current TDU delivery fees on your monthly energy bill. Learn more about Texas electric utility companies.
How To Lower Your Electric Bill in Texas
One of the easiest ways to lower your bill is to use less energy. You can do this by making energy-efficient improvements to your home and adopting smarter energy habits. Here are a few strategies for saving money on your energy bills in Texas while keeping your home comfortable all year long.
Energy-Efficient Home Improvements
Increasing your home’s energy efficiency could save you $200–$400 on annual energy costs. One way to start is with a home energy audit to determine how your home uses energy and spot any efficiency issues. Common home improvements include sealing air ducts, adding insulation, installing energy-efficient windows or appliances and using a smart thermostat. These upgrades help homeowners like you consume less energy, resulting in lower bills.
Smart Usage Habits
Adjusting your energy usage habits throughout the year can help reduce costs. In the summer, use ceiling fans to circulate air. Close the window blinds during the hottest parts of the day to block out the sun. If you’re on a time-of-use energy plan where your rate varies by on-peak or off-peak hours, perform high-energy activities like dishwashing, baking and laundry during off-peak hours to save on costs.
“Turn up the thermostat, turn off the lights—just like your parents used to say. Additionally, unplugging appliances you don’t use regularly can help reduce your overall consumption. Just because an appliance isn’t in use doesn’t mean it’s not consuming energy,” said Don Whaley, president at OhmConnect, an electricity company we chose as the best pick for smart technology savings.
In the winter, lower your thermostat a few degrees. Use space heaters only when you’re in the room. Seal your windows and doors to keep heat inside your home.
Choosing the Right Electricity Plan
Choosing the right electricity plan for your Texas home may help you save money on your monthly energy costs. Factors such as your home’s square footage, the appliances you use and when you use the most energy will all determine which energy plan is right for you. Review your past monthly electric usage to understand how much energy your home typically consumes. Use this information when comparing plans to find the best rate for your usage.
Fixed and variable rates are the most common energy plan types. With a fixed-rate plan, you can lock in a set price per kilowatt-hour that doesn’t change for the length of your contract. This stability means your rates will stay more consistent regardless of usage, ensuring predictable monthly energy costs.
Variable rates change each month based on market conditions. You may secure a low rate when demand is low, but your rates will skyrocket in months when demand is high. Variable–rate plans tend to cause unpredictable and very high energy costs, so we don’t recommend them.
To pick the best plan for your Texas home, consider how much energy you use and whether you prefer stable prices or have room in your budget for unpredictability.
How To Better Understand Your Electric Bill
Taking the time to review and understand your bill keeps you informed and may help you find ways to lower your bills by reducing usage. Start by reviewing the usage section, which details how many kilowatt-hours your home consumed throughout the billing period. Noticing patterns can help you plan for seasonal changes and adjust your usage to save money.
Next, check the cost breakdown. Your energy charge is the cost per kilowatt-hour of electricity you use, and delivery fees cover the cost of getting the power to your home. Some bills also include taxes, other fees and a base charge, which you pay no matter how much energy you use. If your bill is higher than usual, compare it to past bills to see if your usage has gone up or if your provider added new fees.
Frequently Asked Questions About Texas Electric Bills
Why are electricity rates in Texas deregulated?
Texas deregulated its energy market to break up monopolies and create competition among providers, offering customers better rates. Deregulation gave customers the power to choose their energy provider. However, that means Texans also have a responsibility to do their research and constantly monitor both their average usage and the energy market to make sure they’re still getting the best rates for their needs. Actively reviewing electricity rates and provider offerings can help you stay informed about your energy costs and how they stack up in the marketplace.
How can I find the cheapest electricity rates in my area?
You can find some of the cheapest electricity rates in Texas right here on Home Energy Club. Simply enter your ZIP code above and filter the results from low to high to find the cheapest electricity rates in your area.
Do solar panels help reduce electric bills in Texas?
Installing a solar panel system can help reduce your Texas electric bill by reducing your reliance on the grid. Solar panels represent a large upfront investment, so it typically takes a few years to recoup your solar investment. However, on top of reducing how much grid energy you use, you can also sell any excess power your panels generate back to the grid, helping you secure a faster return on your investment.
How often do electricity rates change in Texas?
Energy rates change regularly, often multiple times per month, depending on market conditions. TDU fees typically change twice a year (September and March). However, utility companies can adjust delivery fees multiple times a year with a recommendation from the Electric Reliability Council of Texas (ERCOT) and approval from the Public Utility Commission of Texas (PUCT). Your light company’s energy rate won’t change if you have a fixed-rate energy plan. That said, utility delivery fee changes will impact your monthly energy costs even though your provider’s fixed rate stays the same. If you’re in a variable-rate energy plan, your rate can — and will — change on a monthly basis.
