Texas Energy Affordability Index: How Does Your City Rank?

The Most and Least Affordable Energy Cities in Texas

According to our comprehensive analysis of electricity rates across Texas cities, Houston and surrounding areas have the lowest electricity rates in the state, with an average of 14.10 cents per kWh, while Lubbock faces the highest average costs at 17.32 cents per kWh. This represents a significant price difference of over 3 cents per kilowatt-hour between these cities.

Based on our analysis of electricity rates, income levels, and survey responses, here are the most and least affordable cities for energy costs in Texas:

Most Affordable Energy Cities

1. Houston (14.10 cents per kWh)
2. Sugar Land (14.10 cents per kWh)
3. Spring (14.10 cents per kWh)
4. Baytown (14.10 cents per kWh)
5. Pasadena (14.11 cents per kWh)

Least Affordable Energy Cities

1. Lubbock (17.32 cents per kWh)
2. San Angelo (16.19 cents per kWh)
3. Abilene (16.19 cents per kWh)
4. Lewisville (15.35 cents per kWh)
5. Pearland/Galveston/Texas City/League City (15.08 cents per kWh)

These rankings consider not just the raw electricity rates but also the average income levels and energy burdens reported by residents in these communities.

Here’s how major Texas utility areas compare in terms of electricity rates:

Source: Home Energy Club, March 2025

The statewide average residential electricity rate in Texas currently stands at 16.07 cents per kWh, with plans available for as low as 10.1 cents per kWh for consumers who shop around. However, these averages don’t tell the whole story of affordability across different communities and income levels.

Energy Burden: The True Measure of Affordability

While raw electricity rates provide one perspective, energy burden — the percentage of household income spent on energy costs — offers a more meaningful measure of affordability. This metric reveals how deeply electricity costs cut into family budgets across different cities and demographics.

The average electricity bill varies dramatically by state. Texas is on the higher end of the spectrum due to larger home sizes, intense cooling needs during hot summers, and higher consumption patterns. When comparing energy costs to median household income across states, residents in southern states such as Texas, Mississippi and Louisiana tend to spend a higher proportion of their income on electricity than residents in other regions.

Our February 2025 survey of more than 1,500 Texans with deregulated energy reveals concerning statistics about electricity affordability in Texas:

• Approximately 30% of respondents indicated they would struggle to afford a $50 increase in their monthly electricity bill
• Low-income households reported spending up to 15% of their monthly income on electricity costs
• 68% of respondents cited weather and seasonal temperature changes as the primary factor contributing to bill fluctuations
• Only 48% of respondents believed they were paying a fair rate for electricity (rating of 7 or higher on a 10-point scale)

The estimated average monthly electricity bill in Texas ranges from $165 to $179, which is higher than the national average of $137. This amounts to approximately $2,000 to $2,150 annually, with costs varying significantly based on home size, season and energy efficiency.

When asked, “Would you be able to afford your monthly bill if it increased $50 per month,” nearly one-third of survey participants answered “No” or “Not without significant sacrifices,” highlighting the thin financial margin many Texas families are operating within.

Energy experts define a “high energy burden” as spending more than 6% of household income on energy costs, while a “severe energy burden” means spending over 10% of income. Research from the American Council for an Energy-Efficient Economy (ACEEE) found that a quarter of all U.S. households and two-thirds of low-income ones experience high energy burdens, with Texas showing similar patterns.

Are You Overpaying for Electricity?

Our analysis reveals that many Texans unknowingly pay significantly more for electricity than their neighbors — sometimes as much as 40% to 50% more for the same service. This disparity often stems not from consumption differences but from plan selection and lack of price transparency in the market.

Several factors contribute to this widespread overpayment:

1. Complex pricing structures: Electricity plans in Texas often feature tiered rates, time-of-use pricing, and bill credits that can be difficult to compare directly.
   
2. Outdated contracts: Many households remain on expired contracts with higher holdover rates without realizing they could switch to more affordable options.
   
3. Lack of awareness about local averages: Without knowing what others in their area typically pay, consumers have no benchmark to determine if their rates are competitive.
   
4. Marketing tactics: Promotional rates that appear low can mask higher long-term costs that kick in after introductory periods end.
   

To help Texans determine if they’re paying too much, we’ve developed an interactive Texas Electricity Rate Map that shows average electricity costs:

If you’re paying more than 5% to 10% above the average, it may be time to explore new options at Home Energy Club.

Where Are Texans Struggling the Most?

Energy affordability challenges are particularly acute in several key areas:

1. Lubbock and West Texas: With the highest average rates in the state, Lubbock residents face a significant affordability challenge, especially during extreme temperature fluctuations. According to the U.S. Energy Information Administration (EIA), areas with more extreme climates often require more energy for heating and cooling.
   
2. Rural Communities: Many rural Texans face higher energy burdens despite potentially lower rates as their homes tend to be older and less energy-efficient. The Department of Energy reports that rural households can spend up to twice as much of their income on energy costs as urban households.
   
3. Low-Income Urban Areas: In major metropolitan areas across Texas, low-income households may spend up to 15% of their income on energy costs, according to ACEEE. That’s well above the 6% threshold considered “high energy burden.”
   

Why Lubbock Faces Higher Energy Costs

While Houston emerges as the most affordable city for electricity rates in Texas, Lubbock faces the highest costs, according to our data. Several key factors contribute to this significant disparity:

1. Recent Deregulation Transition: Lubbock Power & Light only completed its transition to the deregulated ERCOT market in late 2023, making it one of the newest participants in Texas’s competitive electricity marketplace. According to the Public Utility Commission of Texas (PUCT), this recent transition has limited the development of robust competition in the area.
   
2. Transmission Infrastructure Costs: Lubbock’s geographic location in the Texas Panhandle places it farther from major generation sources, requiring more extensive transmission infrastructure to deliver power to consumers. The U.S. Department of Energy notes that these infrastructure costs are reflected in the higher rates.
   
3. Smaller Market Size: With a population of about 267,000, Lubbock has a smaller consumer base over which to spread fixed costs compared to major metropolitan areas, such as Houston (2.3 million) or Dallas (1.3 million).
   
4. Extreme Temperature Variations: The Lubbock area experiences more extreme temperature variations than coastal regions of Texas, with very hot summers and very cold winters. According to the National Weather Service, this creates higher peak demand periods and contributes to volatility in electricity prices.
   
5. Limited Competition: Fewer retail electricity providers operate in Lubbock compared to more established deregulated markets such as Houston and Dallas, resulting in less competitive pricing.

Understanding these regional factors helps explain why identical households might pay significantly different amounts for electricity depending on where they’re located in Texas.

Recent Developments for Houston Residents

In positive news for Houston area residents, who already enjoy some of the lowest electricity rates in Texas, the City of Houston recently announced a further reduction in electricity costs. On March 13, 2025, the Public Utility Commission of Texas (PUC) approved a settlement agreement that will reduce CenterPoint Energy’s annual revenue by approximately $50 million, resulting in lower electricity rates for all Houston area customers.

According to the City of Houston, this settlement comes after extensive negotiations between CenterPoint Energy, the Houston Coalition of Cities, and consumer advocacy groups. The agreement is especially significant as CenterPoint had originally requested a $60 million annual revenue increase, which would have resulted in higher rates for residential customers.

Under the approved settlement:

• Residential customers can expect average monthly savings of about $0.82
• Small businesses will save around $1.28 each month
• Larger commercial and industrial customers will see proportional savings

This rate decrease further solidifies Houston’s position as one of the most affordable major cities for electricity in Texas, with rates averaging 14.10 cents per kWh, according to our rate data. The City of Houston states it will continue to scrutinize other CenterPoint rate filings to ensure ongoing fairness in utility rates for residents.

The Affordability Paradox

Interestingly, our analysis reveals that the cities with the lowest raw electricity rates don’t always have the most affordable energy. This paradox occurs because affordability depends on multiple factors beyond the simple price per kilowatt-hour:

1. Income disparities: Despite moderate rates, cities with lower average incomes may have greater affordability challenges.
2. Housing efficiency: Older housing stock with poor insulation can lead to higher consumption and bills.
3. Climate variations: Regions with extreme temperatures require more energy for heating and cooling.
4. Plan structures: Complex, tiered pricing and bill credits can make seemingly low rates deceptive.

The 2025 survey data shows that many Texans remain confused by the complexity of electricity plans, with 57% of respondents indicating difficulty understanding kilowatt usage and rate structures.

Texas Energy Market: Deregulation and Choice

Since 1999, most of Texas has operated under a deregulated energy market, giving approximately 85% of residents the power to choose their electricity provider. This system was designed to foster competition and drive down prices, but the reality has been more complex. Learn more about comparing electricity rates in Texas.

While deregulation has created opportunities for savvy consumers to find better rates, it has also introduced challenges:

• Plan complexity: The typical Texas consumer has to choose from dozens of electricity plans with various rate structures, term lengths and special conditions.
• Hidden costs: Many providers use bill credits and tiered pricing that can make advertised rates misleading.
• Knowledge barriers: Lower-income and elderly consumers often lack the resources to navigate the market effectively.

Current Texas electricity rates typically range from 10.2 cents to 22 cents per kWh, and prices vary based on location, plan type, and usage level.

Solutions and Resources for Texans

For those struggling with high energy costs, several resources and strategies can help:

1. Comparison shopping: Compare electricity plans on Home Energy Club to find the best rates across providers.
   
2. Energy efficiency improvements: The Weatherization Assistance Program (WAP) provides free weatherization services to qualifying low-income households, which can help you reduce energy consumption.
   
3. Energy-efficient practices: Simple changes, such as adjusting thermostats, using ceiling fans, and sealing air leaks, can significantly reduce consumption. The Department of Energy’s LEAD Tool shows that energy efficiency improvements can reduce burdens by up to 25% for low-income households.
   
4. Payment assistance programs: The Comprehensive Energy Assistance Program (CEAP) offers help with energy bills for eligible low-income households.
   
5. Fixed-rate plans: Locking in a fixed rate can provide budget predictability, especially if you sign up during lower-demand seasons, such as spring or fall.
   

Conclusion: The Path To Energy Equity in Texas

The wide disparity in energy affordability across Texas cities highlights the need for targeted policy solutions. While the deregulated market provides choices, many consumers — particularly those with lower incomes — may still struggle with high energy burdens.

Policymakers and utilities should consider:

• Expanding assistance programs for energy-burdened households
• Simplifying plan structures to make comparison shopping easier
• Investing in energy efficiency for older housing stock
• Developing more transparent pricing models

For individual Texans, the key to affordable electricity lies in understanding your usage patterns, shopping carefully for plans that match those patterns, and implementing energy efficiency measures to reduce consumption.

By addressing both systemic issues and individual consumer knowledge, Texas can work toward a future where affordable energy is accessible to all residents, regardless of location or income level.

This article was created using data from the Home Energy Club 2025 Texas Energy Survey, current market data, and research from the U.S. Department of Energy and American Council for an Energy-Efficient Economy. Rate information reflects market conditions as of March 2025.