Thanks to the deregulated energy market, Texans can choose from a variety of retail electricity providers (REPs). Choosing the right energy supplier for your needs may help ensure low rates, predictable monthly energy costs and quality customer service. However, there are 140-plus energy companies registered with the Public Utilities Commission of Texas (PUCT), which can make it a challenge to choose the right company for your needs. Key factors to consider when choosing a provider are your energy usage levels, the price of energy per kilowatt-hour (kWh) and the type of plan you need.
Knowing Your Energy Consumption Patterns
Because everyone’s energy usage patterns are different, no single provider or plan will work for all customers in Texas. The best plan for you will depend primarily on your energy consumption levels and patterns. In short, how much electricity you use and when you use it will determine which provider and plan best meets your needs.
Some energy plans or providers offer low pricing for lower energy usage levels, while others may offer low pricing for high usage levels. Meanwhile, if you use very little electricity during the day but consume plenty of kWh in the late evenings and at night, a time-of-use plan may meet your needs. On the other hand, if you use more than 1,000 kWh consistently every month, a bill credit plan may be worth considering.
Note that if your energy usage often dips below 1,000 kWh, or you often use large amounts of energy during the day, a bill credit plan or time of use plan may end up costing you more than a more straightforward plan.
By analyzing your previous electricity bills to understand your usage levels and gauge your daily or weekly usage patterns, you can identify which plan aligns with your needs. You can also find your precise historic usage data via Smart Meter Texas.
Understanding Different Types of Plans
In Texas, you can choose from different types of plans based on your needs. Your choice will be determined by a few factors, including you’re desire for predictable budgeting versus you’re willingnes to risk unpredictable bills for potential savings.
Some energy companies offer a wide range of plan types, ensuring you’ll find an option that fits your needs. Other companies specialize in few, or even single, plan type offerings. For example, Payless Power currently only offers prepaid energy plans. Knowing which plan type suits your needs can help you best identify the right energy provider for you. Here’s an overview of the four major plan types:
Fixed-Rate Plans
Fixed-rate plans offer an locked-in rate for the duration of your contract. Common term lengths include 12, 24 and 36 months, although some companies offer plans for as short as 3 months or as long as 60 months. Since the energy price in a fixed-rate plan stays the same even if market prices climb, such plans offer peace of mind with predictable monthly costs. Fixed-rate plans charge an early termination fee (ETF) if you cancel the plan before the contract ends. We recommend straightforward, fixed-rate plans for predictable monthly energy bills. TriEagle Energy and Rhythm Energy offer some of the most competitive rates on straightforward fixed-rate plans.
Variable-Rate Plans
Unlike fixed-rate plans, variable-rate plans have rates that decrease or increase based on market trends or at the provider’s discretion. Often called month-to-month plans, variable-rate plans carry a high risk of increased pricing, especially during summer when heat waves drive up electricity demand. You may also face high rates during extreme weather events, such as hurricanes or polar storms. However, because the plan is month-to-month, you can switch at virtually any time without paying a cancellation fee.
Green Energy Plans
Also called renewable energy plans, these offerings come from a 100% renewable energy source, often wind power or solar power. Green plans typically have competitive rates while also helping you reduce your home’s carbon footprint. Green Mountain Energy, Rhythm Energy, Chariot Energy and Gexa Energy offer only 100% green energy plans.
Prepaid Plans
Prepaid plans offer a pay-as-you-go solution, allowing you to pay for your electricity consumption in advance. Prepaid plans can charge fixed or variable rates. Prepaid, no-deposit plans don’t require a credit check or a large upfront deposit. However, prepaid plans may have slightly higher rates than traditional plans.
Providers used to offer a plan type called an indexed-rate plan. The rate these plans charged was tied directly to a specific market index, and energy costs changed in direct relation to the value of the market index. Think of it as a variable-rate plan with rates that could change dozens of times per day rather than just once a month. After Winter Storm Uri, the PUCT implemented consumer protections that made these plans a thing of the past.
Choosing a Term Length That Works For You
When signing up for a new plan, you can choose between term lengths ranging from a few months to a few years. You can also opt for a prepaid plan with no contract term and a month-to-month payment model.
Some things to consider when choosing a term length are the duration you plan to stay at your current address and the possibility of lower rates in the near future. Also, note that some plans offer discounted rates for shorter terms, including three and six-month contracts. Meanwhile, other providers deliver lower rates for plans with longer term lengths. How long you’re staying in your home and the rate you want can all impact which term length you choose.
The time of year is equally important when signing up for a new plan. Often, spring and fall have some of the lowest rates of the year.
When looking at plan options, be skeptical of prices that seem too good to be true. Check for rates that are only offered for the off-season and have a high renewal price in the near future.
How To Evaluate Retail Electric Providers
There are a few factors that can help determine the reliability of a provider. These include things such as how stable the company is and how its customers rate it. Here’s a look at the key factors:
- Financial stability: A financially unstable company may go out of business at any time, leaving you in limbo. Your provider suddenly going out of business can make it a hassle to get your deposit back. Plus, your account may end up being picked up by another company about which you know little or nothing. Stable companies are more likely to have trustworthy systems, particularly for customer support.
- Customer service records: Customer service is key. Check verified customer reviews to ensure any company you’re considering provides top-notch customer care.
- Complaint history: A provider’s complaint history can be a key indicator of the company’s trustworthiness. There are multiple ways to check a company’s complaint history, including a simple web search.
- Years in business: A provider’s industry experience is another factor to consider when choosing a plan. Companies that have been in business for many years are more likely to have robust, established systems for smooth energy service.
Texas’s deregulated market has seen several bad companies, such as Proton Energy, which committed hundreds of violations over its few years of operations. If you are exploring provider options, we recommend checking our guide to the best energy companies in the state. At Home Energy Club, we use an elaborate methodology to assess every provider featured in our guides.
Checking Provider Reliability
Several tools on the internet make it easy to check if an energy provider is reliable. Below is a look at the available options:
How Do I Know if a Supplier Is Reliable?
A foolproof way to check a supplier’s reliability is to check its company profile for customer reviews, ratings and complaints. For complaints, check PUCT complaint statistics for an updated chart on complaint numbers of each provider, including the statistics for each type of complaint. You can also check the Better Business Bureau (BBB) for customer complaints as well as reviews and ratings.
What Happens if My Supplier Goes Out of Business?
If your provider goes out of business, you will not lose power, thanks to regulations created by the PUCT. However, you will have to choose a new provider within 60 days. During this period, your home’s electricity will automatically switch to the provider of last resort (POLR). In the service territory of Oncor, the POLR is TXU Energy, while Reliant Energy is the POLR for all other transmission and distribution utilities (TDU).
How To Read and Compare Electricity Facts Labels
When choosing a new electric plan, we highly recommend reading the plan’s electricity facts label (EFL). A document required by the state, the EFL provides information on a plan’s fees, charges, promotions and penalties. Carefully reading the EFL can help you understand a plan’s hidden costs. You’ll also find other useful information, such as the percentage of renewable energy or the company’s contact information.
Important Contract Terms To Consider
Before you finalize a plan, it’s crucial to consider terms related to cancellation and renewal of your contract with the provider to avoid unexpected costs or billing surprises. Below are three main contract terms to be aware of:
Early Termination Fees
When you sign up for a plan with a contract but switch your provider before the contract period is over, the provider charges you an early termination fee (ETF). The ETF with some providers can be as high as $395, which makes it essential to make note of the fees before signing up. You can avoid an ETF if you’re moving outside your provider’s service area or there are fewer than two weeks remaining in your contract.
Auto-Renewal Terms
While month-to-month plans will automatically renew, fixed-rate plans don’t renew at the end of your term. You must sign up for a new plan when your contract is up. You should start researching electricity rates at least a month before your energy plan expires to avoid being transitioned into a holdover, variable-rate plan.
Usage Credits
Bill credit or usage credit plans can look especially attractive during your search for an electric plan. These plans offer a usage-based account credit when your usage meets or exceeds a specific kWh level, typically 1,000 kWh. Some bill credit plans have a minimum and maximum amount, meaning your energy usage must stay within a specified range for you to qualify for the bill credit. In months when you don’t secure the bill credit, your energy rate will skyrocket.
Understanding Pricing Structures
Although simple flat-rate billing per kWh has been the norm for many years, more complex billing structures are becoming common to offer different plan types to customers.
Most providers also offer time-of-use plans, which have high rates during peak demand hours and low rates or free power during off-peak hours, such as nights or weekends. Before signing up for a plan, we recommend understanding its pricing structure and making sure that it suits your energy usage levels and patterns.
The Role of TDU Charges
Regardless of which supplier you sign up with, part of your electricity bill will go to your electric utility company in the form of delivery charges. These delivery fees cover the cost of building and maintaining the power transmission infrastructure. Unlike retail electricity providers (REP), transmission and distribution utilities (TDU) are in charge of the actual energy supply through a complex network of transmission towers, substations and distribution panels. Utility company service areas are preset. Where you live determines which TDU operates in your area.
The TDU charges are the same regardless of your provider but will change with TDUs. TDU fees generally have two components: a flat monthly fee and a charge per kWh.
The Switching Process
Switching energy providers can be a great way to save money on your energy bills. In Texas, the process for switching providers is simple. All you have to do is provide some basic information (such as your identification and service address), then sign up for your chosen plan with your new provider. Your new electric company will handle canceling with your old company and starting up your new service.
However, we recommend considering a few important factors before switching your provider, such as understanding your energy usage, checking a provider’s reliability and comparing plans to find the most suitable one.
How Often Can I Switch Suppliers?
There is no regulation for how many times you can switch your energy supplier. However, most electricity plans come with a contract, and you may have to pay a cancellation fee if you switch your supplier while the contract is active.
How Long Does it Take To Switch Suppliers?
Switching suppliers can take about a week but may take longer in some cases. Several providers also offer same-day electricity if you sign up before their cut-off hours.
Can I Switch Suppliers if I’m Under Contract?
You can technically switch suppliers when under contract, but your existing supplier will levy an early termination fee (ETF) for switching during an active contract. However, if you switch providers up to 14 days before the contract’s end date, you won’t have to pay an ETF.
Special Considerations for Different Customer Types
Small Business Customers
The process for small businesses to choose an electric supplier in Texas is similar to that for residential customers. Since businesses usually consume more energy than homes, we recommend analyzing your energy bills to understand average consumption and choosing a plan and provider that offers low pricing and simple terms for that usage threshold.
Some larger businesses are allowed to use a negotiated purchase process, similar to buying business equipment. In this process, they can negotiate the pricing and terms of the electric plan.
When choosing a plan, you can also opt to use an aggregator. Aggregators are entities that represent a group of customers, such as multiple small businesses, employees, etc. Aggregators can purchase electricity in bulk for their represented group.
High-Usage Customers
Some providers design energy plans specifically tailored to large homes with high energy usage. Typically, these plans have low pricing when your energy consumption reaches 2,000 kWh or more. If you are a high-usage customer, we recommend browsing through plans with low rates for higher thresholds.
How We Rate and Review Texas Electricity Companies
With dozens of providers and hundreds of plans available in the deregulated Texas market, choosing the right one can feel overwhelming. We created a comprehensive rating methodology to help you cut through the complexity and find the best electricity plan for your needs, whether you’re moving to Texas or looking to switch providers.
We’ve researched dozens of Texas electricity providers and scored them out of 5 stars based on cost, bill predictability, customer satisfaction, brand trust, and plan features. Here’s how those core factors weighed into our ratings:
- Plan features (33%)
- Customer satisfaction and brand trust (27%)
- Plan rates and pricing (20%)
- Energy bill predictability (20%)
