Texas’ deregulated electricity market covers around 85% of its population, including the Greater Houston metropolitan area and the Dallas-Fort Worth metroplex. If you live in an area with deregulated energy, you’re free to choose your electricity provider. This provides the opportunity to save on power bills by looking for an energy provider with low rates, but a deregulated electricity market also brings some challenges.
As of November 2024, the Public Utility Commission of Texas (PUCT) has listed around 1,600 electricity plans and more than 300 available providers. Many electricity plans offer fixed rates and predictable monthly bills, but other plans use hidden fees and “pricing gimmicks” to charge you more — all while advertising low rates.
In this guide, we’ll help you decipher those complex rates, compare reputable electricity companies and bypass deceptive offerings to find the best electricity plan for you.
Understanding Texas Power
Throughout the 1900s, Texas relied on traditional electricity companies that controlled all stages of the power supply process: generation, transmission, distribution and billing. However, the Lone Star State deregulated its electricity sector in 2002, which brought major changes to the energy market.
- Deregulation breaks down traditional power monopolies, allowing competition among different electricity companies.
- Homes, apartments and businesses can now choose among multiple energy providers and unique electricity plans instead of being limited to a single power company.
It’s important to note that Texas is not fully deregulated. Some major cities such as San Antonio, Austin, El Paso and Amarillo still have a single power company in their metropolitan areas. However, electric choice is available in most areas of Texas. Some major cities with deregulated electricity are Houston, Dallas, Fort Worth, Arlington, Corpus Christi, Plano and Lubbock.
As of 2024, 32 states and Washington, DC, have introduced some form of deregulation to their energy markets, but the options available vary by location. Some states have deregulated both electricity and natural gas, while others have only deregulated one utility service. Also, some states offer deregulated energy for both residential and commercial customers, while others have only deregulated one market segment.
How Texas Electricity Providers Work
Instead of having vertically integrated utility companies, a deregulated electricity market operates with three different types of companies:
- Power generators: These companies are exclusively dedicated to generating electricity, which is sold in bulk on the wholesale market.
- Retail electricity providers (REPs): Also called light companies, these entities sell electricity to residential and business customers, offering electricity plans with different rates and contract terms. Light companies buy electricity in bulk from the wholesale market and resell it in smaller amounts to individual customers through the retail market.
- Transmission and distribution utilities (TDUs): Utility companies don’t sell you electricity, but they do manage the local power grid in Texas. While you can choose your energy provider in deregulated areas, only one utility company manages the grid in your service area. Regardless of your chosen electricity plan, the local utility charges delivery fees for bringing energy to your home.
Residential power bills include charges from your chosen electricity provider and the local utility copmany, but you never deal with power generators directly. The PUCT has listed 140 retail electricity providers with 167 alternative business names, for a total of 307 providers in the market. All these electricity companies can compete for customers in all areas of the deregulated electricity market.
On the other hand, only six utility companies manage the transmission and distribution of electricity, each with exclusive an service territory, which means they don’t compete directly:
- Oncor Electric Delivery
- CenterPoint Energy
- AEP Texas North
- AEP Texas Central
- Texas-New Mexico Power (TNMP)
- Lubbock Power & Light (LP&L)
When we talk about choosing your electricity provider, we’re referring exclusively to light companies. Your utility is assigned by geographic location, meaning the only way to switch is by moving outside of its service territory.
Texas also has two major entities with critical roles in the local electricity market:
- Electric Reliability Council of Texas (ERCOT): The independent system operator of the Texas power grid, which manages the flow of electricity for more than 26 million customers throughout the state.
- Public Utility Commission of Texas (PUCT): The state government agency that regulates utility services in Texas, which includes overseeing the electric power supply.
ComparingTypes of Electricity Plans
In a deregulated energy market, electricity providers can create unique energy plans with different rate structures and contract terms. For this reason, you can find hundreds of electricity plans in Texas. However, most of them can be classified into a few broad categories.
We normally recommend fixed-rate plans because they offer the most predictable power bills, but other types of plans may benefit you under specific circumstances.
Fixed-Rate Electricity Plans
These electricity plans charge a fixed energy price during the entire contract term, offering predictable power bills. Most fixed-rate plans have 12, 24 or 36-month contracts, but you can also find plans shorter than 12 months or with terms of up to 60 months. For maximum savings, we recommend enrolling in a fixed-rate plan during spring or fall, when Texas electricity rates are typically at their lowest points of the year.
Fixed-rate plans are generally the best option for homeowners looking for predictable energy costs. However, keep in mind that these plans charge an early termination fee (ETF) if you switch to another plan before your contract ends. Some Texas electricity companies charge a flexible cancellation fee based on the months left in your contract, but others charge a flat ETF regardless of the number of months remaining.
Variable-Rate Electricity Plans
Variable-rate plans are the opposite of fixed-rate plans. These plans have no minimum contract term, which means you can switch to another plan at any time without cancellation fees. However, variable-rate plans have a major drawback: your electricity rate can change every month based on the energy market or at the discretion of your provider.
We don’t recommend variable-rate plans because they make your power bills unpredictable. These plans may offer temporary savings when market rates are low, but tend to erase any savings achieved on the next price hike. Variable-rate plans can lead to extremely high bills during the summer months since you’re using more electricity due to air conditioning while paying a higher rate per kilowatt-hour. These plans can reach rates of over 20 cents per kWh during the hottest months.
Prepaid Plans
Traditional electricity plans charge you a monthly bill based on your measured consumption during the latest billing period, which means you are using electricity first and paying for it later. If you choose a prepaid plan, you pay for electricity in advance, and your consumption is subtracted from your balance.
Prepaid plans also give you the flexibility to pay for electricity at any time, as long as you keep your account balance above $0. For example, you can make a weekly deposit if you prefer smaller payments, or you can make a large deposit that will cover several months of electricity consumption.
If you’re interested in prepaid electricity, we recommend Payless Power. Many energy providers offer prepaid plans with variable rates, which leads to unpredictable electricity costs. However, Payless Power offers fixed-rate prepaid plans with contract terms of up to 36 months.
Renewable Energy Plans
Texas generates around 33% of its electricity from renewable sources, but some electricity providers offer plans with a 100% renewable energy content. We recommend these plans for homeowners who are looking for ways to reduce their carbon footprint. There is a common misconception that renewable energy is more expensive, but some renewable plans actually have lower rates than traditional plans. You can find renewable plans from providers like Rhythm Energy, Reliant, Gexa Energy and Green Mountain Energy.
Renewable electricity plans typically include features from other plan types. For example, you can find renewable plans in both fixed-rate and variable-rate versions. We recommend fixed-rate options for predictable electricity costs.
Time-of-Use (TOU) Plans
Time-of-use plans charge different electricity rates depending on the hour. Typically, TOU plans charge the highest rates during the evening, when the power grid faces peak demand from residential customers. However, they offer low rates during off-peak periods. You can also find TOU plans with free energy periods, which are normally offered at night or during the weekend.
A TOU plan can save you on power bills if you can shift your energy usage away from peak-rate hours. However, this means lowering your consumption precisely when homes tend to need the most electricity. Taking advantage of a TOU plan requires lifestyle changes that are not viable for many residential customers.
Understanding Electricity Rates
Since there are hundreds of electricity plans in Texas, the charges found in your power bill can vary. However, most electricity plans include four types of charges:
- Base charge: Many electricity plans include a fixed monthly charge ranging from $0 to $20, regardless of your usage.
- Energy charge: This is the kilowatt-hour price charged by your electricity provider multiplied by your measured consumption.
- Delivery charge: Also known as the TDU charge, this is the delivery fee for bringing each kilowatt-hour to the point of use.
- Local taxes: The local tax rate is typically calculated as a percentage of your total bill, and it can vary depending on your location in Texas.
Calculating Electricity Rates
When you compare electricity plans, they show your average kilowatt-hour price at three different consumption levels: 500 kWh, 1,000 kWh and 2,000 kWh per month. These average rates include all the charges described above, except for local taxes, and any other charges from your specific electricity plan. They may also include assumed discounts, such as bill credits or time-of-use savings, which can make them somewhat misleading.
Here is an example using the Frontier Utilities Budget Saver 12 plan in the Oncor territory, which covers Dallas-Fort Worth and many surrounding areas:
| Monthly Consumption | 500 kWh | 1,000 kWh | 2,000 kWh |
|---|---|---|---|
| Frontier base charge | $0.00 | $0.00 | $0.00 |
| Frontier energy charge | 10.04 cents per kWh$50.20 total | 10.04 cents per kWh$100.40 total | 10.04 cents per kWh$200.80 total |
| Oncor base charge | $4.23 | $4.23 | $4.23 |
| Oncor delivery charge | 5.2974 cents per kWh$26.49 total | 5.2974 cents per kWh$52.97 total | 5.2974 cents per kWh$105.95 total |
| Total power bill (before taxes) | $80.92 | $157.60 | $310.98 |
| Average cost per kilowatt-hour | 16.18 cents per kWh | 15.76 cents per kWh | 15.54 cents per kWh |
The rates above are accurate as of February 25, 2025.
The calculation becomes more complex for electricity plans that include features like usage-based bill credits, time-of-use rates or solar buyback rates. We recommend checking the electricity facts label (EFL) before enrolling in any plan so you can identify all charges included in your monthly power bill.
Usage Scenarios and Rate Implications
As you can see in the example above, your average kilowatt-hour price varies based on your consumption level. In a fixed-rate plan, this slight price variation can be explained by the effect of base charges. For example, a base charge of $10 adds 2 cents to your average rate if your consumption is 500 kWh, but only 0.5 cents if your consumption is 2,000 kWh. This is because the flat monthly fee divides across the kilowatt-hours of usage when calculating your effective energy rate.
Other types of electricity plans have a more drastic price variation across different consumption levels. This is especially common in bill-credit plans, which offer a low average rate if you qualify for the bill credit, but a much higher rate if you don’t.
Let’s repeat the calculation from the previous section using the Gexa Energy Eco Saver 12 plan. This plan offers a $100 bill credit if your monthly consumption is at least 1,000 kWh.
| Monthly Consumption | 500 kWh | 1,000 kWh | 2,000 kWh |
|---|---|---|---|
| Gexa base charge | $0.00 | $0.00 | $0.00 |
| Gexa energy charge | 15.22 cents per kWh$76.10 total | 15.22 cents per kWh$152.20 total | 15.22 cents per kWh$304.40 total |
| Gexa bill credit | $0.00 | -$100.00 | -$100.00 |
| Oncor base charge | $4.23 | $4.23 | $4.23 |
| Oncor delivery charge | 5.2974 cents per kWh$26.49 total | 5.2974 cents per kWh$52.97 total | 5.2974 cents per kWh$105.95 total |
| Total power bill (before taxes) | $106.82 | $109.40 | $314.58 |
| Average cost per kilowatt-hour | 21.36 cents per kWh | 10.94 cents per kWh | 15.72 cents per kWh |
The rates above are accurate as of February 25, 2025.
The Frontier Utilities Budget Saver 12 plan has a price variation of less than 1 cent per kWh across different consumption levels. In contrast, the Eco Saver 12 plan rate doubles if your monthly usage drops below 1,000 kWh.
Also, note that the price-reduction effect of the bill credit is diminished if your monthly consumption is much higher than 1,000 kWh. In short, a bill credit plan may generally only provide value if your usage stays within a very strict level of kilowatt-hours per month. Stray outside that usage level at any time, and your rates may increase, leading to unpredictable monthly energy bills.
How To Choose the Right Electricity Provider
Here are some key factors to consider when comparing electricity plans and providers:
- Rate stability: We recommend fixed-rate electricity plans with a contract term of at least 12 months since they offer the most predictable power bills over time. Other types of plans may offer savings in certain cases, but they can also surprise you with high bills.
- Customer service reputation: Even if you choose a fixed-rate plan, billing errors and other issues can happen. Ideally, you should look for an electricity company with a proven track record of handling customer issues effectively.
- Contract terms: We recommend 12-month electricity plans since they start and end in the same month. If you enroll in spring or fall, when Texas electricity rates are typically low, you can secure affordable rates every year. If you’re willing to assume a longer contract term, 24 and 36-month plans are also viable.
- Renewable energy options: Texas still generates most of its electricity with fossil fuels, but you can find many renewable energy plans in the market. These plans often include additional benefits such as affordable fixed rates or allowing you to sell excess energy from solar panels.
- Additional fees: We recommend reading the electricity facts label (EFL) before enrolling in any energy plan, regardless of its advertised benefits. Electricity providers can hide fees and unfavorable contract terms on their websites and marketing campaigns, but they are legally required to disclose all fees on their EFLs.
Switching Electricity Providers
Texas electricity providers can normally switch your service in less than 24 hours unless you submit your request on a Sunday or holiday. Thanks to the smart meters used in Texas homes and businesses, the entire switching process can be completed digitally — with no physical rewiring needed.
Note that switching your electricity provider may have additional requirements in some cases:
- Early termination fees (ETF) in fixed-rate plans: If your current plan has an established contract term and you want to switch early, you must pay the ETF. However, you are exempt from the ETF if you move to another address.
- Electrical accounts with a switch-hold: If your current electricity provider has placed you on a switch-hold for pending bills, you cannot switch to another provider.
- Security deposits: Before accepting new customers, electricity companies normally require a credit check. Your new provider may also request a security deposit, depending on its internal requirements and your credit score.
Best Times To Sign Up for Electricity
Typically, spring and fall are the best times to enroll in a fixed-rate electricity plan in Texas. Since these seasons have milder weather than summer and winter, there is a reduced power demand from air conditioning and space heating systems. Since Texas has a competitive energy market, low demand normally leads to affordable rates. We recommend 12-month plans, which give you the opportunity to secure low rates every year.
You can often find promotional plans with terms shorter than 12 months. These plans can offer temporary savings, but you should watch out for their end date. If you enroll in a promotional plan scheduled to end in summer or winter, you will be forced to start another plan during a high-rate period.
Understanding Your Electricity Bill
The exact format of your electricity bill varies depending on your chosen provider. Here is a sample bill from TriEagle Energy, one of the top-rated electricity providerss in our review.
The TriEagle Energy sample bill includes the following items:
- Service period: Indicates the start and end dates of the latest billing period.
- Meter readings: Your power meter shows your cumulative electricity consumption. To determine your consumption during the latest billing period, your provider subtracts your previous meter reading from your current reading.
- Base charge: This is a fixed monthly charge, regardless of your consumption.
- Energy charge: This charge is calculated by multiplying your measured consumption by your electricity rate. In this bill, the rate of 15.2 cents per kWh combines the TriEagle Energy charge and the local TDU charge.
- Taxes: The bill breaks down all the applicable charges, which vary by location.
- Previous charges: Any outstanding charges from previous billing periods are added to your current bill.
- Total amount due: This is simply the sum of all charges above.
Consumer Rights and Emergency Preparedness
Understanding Your Rights as a Texas Electricity Consumer
Texas electricity plans include a document called Your Rights as a Customer (YRAC), which is provided along with the EFL. The information in this document can vary depending on the provider, but Texas electricity consumers have the following rights:
- All energy plans must include an EFL explaining their charges and contract terms.
- Your electricity provider must issue your power bills on time, providing a clear breakdown of your charges and making sure your consumption is accurately metered.
- Your provider must provide advance notice of any changes in your electricity plan.
- Your provider cannot disconnect your service for lack of payment during emergency conditions or if there are household members with certain medical conditions.
- Electricity providers must offer payment plans for customers who are facing financial hardships.
You can dispute billing errors and other billing issues with your electricity provider, and if you cannot reach a solution, you can file a complaint with the PUCT.
Power Outage and Emergency Planning
Texas has experienced widespread power outages during extreme weather events, such as Winter Storm Uri in February 2021 and Hurricane Beryl in July 2024. Keep in mind that your chosen electricity provider has no control over the power grid — only the local utility company can restore power during a power outage.
If you are concerned about power outages in Texas, consider buying a backup generator. You can install a solar panel system equipped with a home battery, such as the Tesla Powerwall, for a renewable option that doesn’t depend on natural gas.
Tips for Reducing Your Electricity Bill
You can save on monthly power bills if you secure a fixed-rate plan when market prices are low. However, you can achieve even greater savings if you improve the energy efficiency of your home. Here are some low-cost recommendations to cut your energy usage and save.
- Upgrade to high-efficiency LED lighting
- Install a smart thermostat
- Seal any air leaks around your doors and windows
- Get a home energy audit
If you’re willing to make a larger investment in energy efficiency, you can also consider upgrading your air conditioning and space heating systems. Installing a home solar system is also a viable option, especially with the abundant sunshine available in Texas.
Frequently Asked Questions About Texas Power
What are the most common hidden fees in electricity plans?
Electricity plans may include fees that are not evident when comparing only their energy rates. Here are some common hidden fees to watch out for:
- Early termination fee (ETF): This fee applies if you enroll in a plan with an established contract term and switch to another plan before the contract ends. Many 12-month plans have an ETF of $150, but this figure can exceed $300 in longer plans.
- Minimum usage charge: Some plans include a flat fee if your monthly consumption falls below a specified value. This fee increases your average rate at lower usage levels.
- Payment processing fees: Some electricity providers charge additional fees for specific payment methods, such as paying over the phone with an agent.
- Energy charges in bill credit plans: These plans often advertise the average rate achieved when you qualify for monthly bill credits, not their real rates.
- Energy charges in free nights and free weekends plans: These plans often advertise the average rate for all your energy consumption, even the portion measured during free periods. The actual electricity rate during non-free periods is typically much higher than the advertised rate.
How do deposits work for electricity service?
Electricity providers may require a security deposit if you have a low credit score, a limited credit history in Texas or a history of late payments with other providers. You can avoid security deposits if you have a good credit score or by enrolling in prepaid electricity plans, which don’t have this requirement. Security deposit policies vary by provider, but the PUCT does not allow deposits that exceed two months’ worth of estimated power bills.
What happens if I’m late on an electricity payment?
Electricity providers charge a penalty if you miss the payment date of your electricity bill, which is typically around 5% of your bill.
The PUCT prohibits electricity providers from disconnecting your service immediately after a missed payment. They are required to send a disconnection notice at least 10 days in advance, giving you time to pay your overdue bill or make a payment arrangement.
Can I switch providers if I’m in the middle of a contract?
Yes, but you must pay the early termination fee (ETF) for your current contract. However, you are exempt from the ETF if you switch your electricity plan while moving to another address.
How do I choose the best power company in Texas?
There are dozens of electricity providers in Texas, and different plans may be viable for your home depending on your usage habits and payment preferences. However, we recommend fixed-rate electricity plans from energy providers with high scores in our review methodology since they offer the most predictable bills over time. Our recommendations include:
- Reliant Energy (4.9/5)
- Champion Energy Services (4.9/5)
- TriEagle Energy (4.8/5)
- Rhythm Energy (4.5/5)
- Frontier Utilities (4.5/5)
- Veteran Energy (4.4/5)
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 results from our 2025 energy survey of 1,600 Texans, scoring providers on customer satisfaction, experience and retention. Here’s how these core factors weighed into our ratings:
- Customer satisfaction (30%)
- Customer retention (30%)
- Online experience (20%)
- Customer experience (20%)
