Whether you’re a resident of the Texas deregulated energy market or you live in one of the many other deregulated states, you may benefit from switching energy providers.
As you start your search for a new light company, you’ll find that most areas in Texas have dozens of energy providers and hundreds of electricity plans to choose from. Having so many options can be challenging. It may help your comparison process to determine why you’re switching energy companies.
You may want to switch electricity providers or plans if you find a cheaper plan, realize that your existing plan isn’t well-suited to your energy usage levels or move to a new service area in a deregulated state. If you’re conscious about your carbon footprint, you may want to switch to a green energy company that better aligns with your sustainability goals.
How Does Switching To a New Energy Provider Work?
Switching to a new provider is a simple process involving the following steps:
- Understand your usage needs: Before you switch providers, assess your energy usage levels and patterns to pick the right plan and company for your needs. Note your average monthly energy consumption and decide if you want clean energy.
- Review your contract terms: Before you switch your electricity supplier, make sure you’re near the end of your current plan’s contract. Most providers will charge an early termination fee (ETF) if you cancel before the contract ends. In Texas, you are exempt from the ETF if 14 days or less remain in your contract.
- Browse energy plans: The most important step in switching your providers is selecting the correct electric plan. Different plans suit different customers, and you need to choose one that suits your home. Look for plans with low pricing for your average usage levels and your preferred renewable energy content.
- Sign up for the new plan: Once you find the right plan, we can help you sign up online or over the phone in just a few minutes. All you have to do is provide the necessary information and documents, including your name, address, ESID number and identification. You don’t have to inform your existing provider about a switch. When you sign up for a new plan and provide a date of activation, your existing plan will automatically deactivate on that date.
Before You Switch
As mentioned above, you must review certain items from your existing plan to avoid any unexpected charges. Here is a checklist for the same:
- Current contract terms
- Early termination fees
- Required notice periods
- Final meter readings
- Payment arrangements
After the Switch
After you sign up for a new plan, all you need to do is sit back and wait for the switch to be complete. When your service with the new provider begins, your first energy bill will be from the new provider. At this point, we recommend checking the bill to ensure that it displays your chosen plan and that the energy price and energy consumption values in kilowatt-hours (kWh) are correct.
What Changes When You Switch Energy Providers?
The following things will change when you switch your energy providers:
- Electricity rate: Different suppliers offer different electricity rates with their plans, so your monthly energy costs will most likely change with your provider.
- Customer service: Your new provider will have its own customer support department, which you should contact in case of incorrect billing or other errors.
- Bill portal: Your new provider will have a different portal for bill payment, and you may need to provide payment details again when paying your first electric bill. Pro tip: consider autopay. It’ll help make sure you never miss a payment, plus some providers offer discounts when you sign up for automatic billing.
What Stays The Same When You Switch?
Some aspects of your electricity supply will remain the same even after you change your provider, such as:
- Utility Company: Your transmission and distribution utility (TDU), which is responsible for operating and maintaining the transmission infrastructure in your location, will remain the same as long as you stay in its service territory.
- Outage possibilities: Your choice of provider will not impact the possibility of outages in your area. Transmission equipment failure or unexpected imbalances in supply and demand typically cause outages, and both of these issues are outside your provider’s control. The local utility company manages the power grid and is responsible for repairing power outages.
Understanding Energy Choice and Deregulation
In a regulated energy market, a single entity generates energy, sells energy to customers and deliveries that electricity to homes and businesses. If you live in a regulated market, you can’t choose which electric company you work with. You can only use the local utility.
However, in a deregulated energy market, such as Texas, you have “energy choice,” meaning you get to pick which energy company you work with. Through a free market, competitive suppliers work to earn your business. Many states now have deregulated markets, including Texas, Pennsylvania, Ohio, New York, Massachusetts, and more.
How Deregulated Energy Markets Work
A deregulated energy market typically has three key players in it: power generators, utility companies and retail providers. Utility companies (TDUs) manage the energy transmission through the infrastructure, and retail energy providers (REP) create energy plans and sell the energy they purchase in wholesale auctions from generators. In Texas, the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) oversee these auctions to ensure fair competition.
Check Your Eligibility to Switch Providers
Not all electricity customers have the ability to choose their energy provider. Customers in regulated energy areas must stay with their designated utility company. In other words, you can only switch providers if your address falls in a deregulated area.
Over two dozen states in the U.S. offer some sort of energy deregulation. Some states have deregulated both natural gas and electricity. However, many states only offer one or the other. To determine if your area is deregulated, you can call your local utility company.
If you live in Texas, you can check if your area is deregulated by punching in your ZIP code below.
Finding Available Energy Suppliers
If you live in an area with energy deregulation, you can research authorized energy providers using online tools. Some states with energy deregulation have official websites for browsing through energy plans. For instance, Texas customers can use Power to Choose, an online platform managed by the PUCT, to search for energy plans and providers. You can also compare energy providers and electricity rates right here on Home Energy Club.
Compare Energy Plans and Providers
Because of deregulation, Texas providers now offer many plan types. Knowing the pros and cons of each can better prepare you to choose the best plan for your needs. The most common plan types are fixed-rate plans, variable-rate plans, prepaid plans, bill credit plans and renewable energy plans.
Fixed-rate plans require you to sign a contract for a preset term, with lengths ranging from a few months to a few years. This plan type also offers an unchanging rate even if market prices go up. Variable-rate plans — also called month-to-month plans — have pricing that changes monthly based on market trends. However, they don’t have a contract requirement. That said, we don’t typically recommend variable-rate plans because they commonly lead to unpredictable energy costs.
Prepaid plans eliminate the need for credit checks or security deposits, and you pay for the energy before using it. In many cases, prepaid plans also offer fewer chances of billing surprises. However, many prepaid plans charge variable rates. Payless Power is the top Texas-based prepaid energy provider in our review.
Customers interested in clean energy can also choose renewable/green energy plans.
Types of Energy Plans
Below is a chart with a short description of each important plan type:
| Plan Type | Details |
| Fixed-rate plans | Contract-based plans with a constant energy price for the contract duration |
| Variable-rate plans | Plans with varying prices based on market prices and no contract requirement |
| Prepaid plans | Plans with no credit check or deposit requirement but with pre-payment |
| Green energy plans | Plans with energy procured from renewable energy sources |
What To Look for in a New Provider
With so many options to choose from, deciding on a new provider can be confusing. Here are some factors to consider when comparing providers:
- Pricing structure: Lower energy rates mean low monthly bills, but make sure to check for hidden fees or deceptive savings offers, such as bill credits.
- Contract length: Choose a contract length that is convenient for you. If you like to shop around for better prices, you can choose a shorter contract.
- Customer service ratings: Providers with high customer ratings and fewer complaints are less likely to have billing errors and other issues.
- Renewable energy options: If you are interested in clean energy plans, look for providers specializing in green energy, such as Gexa Energy or Green Mountain Energy.
- Additional fees: Be sure to check for additional fees or charges before signing up for a plan.
- Enrollment process: Many providers offer a hassle-free enrollment process, allowing you to sign up for a plan within a few minutes.
Understanding Switching Costs and Fees
When switching electric suppliers, you may come across two types of fees. First, you may owe an ETF if you cancel with your current supplier before your contract is up. Second, you may owe a deposit to your new energy supplier, depending on the results of a soft credit check. Don’t worry; the credit check won’t impact your credit score. Plus, the deposit is typically refundable after 12 months of on-time payments. While you may face these fees, note that there aren’t any official “switching fees.”
Early Termination Fees
The ETF, also known as an exit fee, can be as high as a few hundred dollars, negating the effect of your savings from a new plan. You can avoid the ETF if you switch providers up to 14 days before your contract ends or if you’re moving outside of your provider’s service area.
Should You Switch Energy Providers?
Switching energy providers offers multiple benefits, from securing lower energy costs to reducing your home’s carbon footprint. However, you should do your research before switching.
Determine your home’s usage and compare energy plans to see if there’s a better option for your home. Check to see if you’ll owe an ETF before switching providers. Note that in some cases, you may find that the savings offered by your new provider are significant enough to cancel out any cost incurred by the cancellation fee. Evaluate your options before canceling your current plan.
Whether you’re looking for better customer service, more sustainable energy or cheap electricity rates, switching energy providers could help you take charge of your home’s energy needs.
Frequently Asked Questions About Switching Energy Providers
Can I switch electric companies in my area?
You can switch electric companies if your address falls in an area with a deregulated energy market.
What is the exit fee for energy?
An exit fee is a penalty your energy supplier charges for moving out of a contract before the end date. In some places, it is also known as an early termination fee (ETF) or a cancellation fee.
What company is the best energy supplier?
In our review of dozens of Texas electricity companies, Reliant Energy, Green Mountain Energy and TriEagle Energy earned the top three places. However, different energy suppliers offer different benefits. The provider that suits you best will depend on factors specific to you, such as energy usage levels, preference for clean energy content and more.
Can I switch electric companies without penalty?
Yes, you can switch your electric companies without a penalty if you’re not in an active contract with your existing provider. In Texas, you are also exempt from any cancellation charges if you switch providers up to 14 days before your contract ends. Lastly, you won’t be charged a penalty if your reason for switching your provider is a change in your address.
