Finding the right electricity plan isn’t as simple as picking the lowest advertised rate. In states like Texas, where the electricity market is deregulated, consumers have the power to choose their provider. Understanding the average electricity rate can help in making informed decisions. It's also important to compare various options to find the best electricity providers, especially in deregulated markets where consumers can benefit from lower rates and favorable terms.
This guide breaks it down so you can make informed decisions, avoid common pitfalls, and find the best plan for your needs.
Electricity rates are the price you pay for each unit of energy, measured in kilowatt-hours (kWh). These rates vary depending on location, market conditions, the type of plan you choose, and how much electricity you use. In Texas, competition among providers results in a wide range of rate structures, each with different pricing models and contract terms.
Your monthly electric bill is directly impacted by these rates. For example, in Hawaii, the average electric bill is significantly higher due to higher electricity rates, while in Louisiana, it tends to be lower.
Deregulation in Texas means you aren’t limited to a single utility company. Instead, you can shop around for electricity providers that offer different rates and contract options. However, while providers set the prices, the infrastructure that delivers electricity to your home—poles, wires, and transformers—is still managed by local utilities like Oncor, CenterPoint, AEP Texas, and Texas-New Mexico Power. If there’s a power outage, your local utility is responsible, not your electricity provider.
Not all electricity plans are the same. The structure of your plan can impact how much you actually pay, and some plans that seem cheap upfront end up costing more in the long run. Here are the most common options:
Fixed-Rate Plans lock in your electricity price for the duration of your contract, which can range from 12 to 36 months. These plans offer price stability and protection from market fluctuations. However, if you need to cancel before your contract ends, you may have to pay an early termination fee, also known as cancellation fees.
Variable-Rate Plans fluctuate based on market conditions. When demand is low, rates may drop, but they can spike when demand is high. These plans offer flexibility, but budgeting can be unpredictable. Consumers can find the cheapest electric rate by comparing different plans and providers.
Tiered Rate Plans charge different rates depending on how much electricity you use. For example, the first 500 kWh might be at one rate, but usage beyond that is billed at a higher price. These plans work best for households with consistent energy consumption.
Free Nights & Weekends Plans sound appealing but often result in higher overall costs. These plans offer free electricity during off-peak hours, but the daytime rates are significantly higher. Most people use electricity throughout the day, so unless your usage habits match the plan structure, you’ll likely pay more.
Bill Credit Plans give you a discount if you meet a certain usage threshold. For example, if you use more than 1,000 kWh in a month, you might get a $50 bill credit. If you fall just short of that threshold, however, you’ll miss the discount and end up paying more than expected.
The key to finding a good electricity plan is to look beyond the advertised price and focus on the details that impact your actual bill.
Read the Electricity Facts Label (EFL). Every plan in Texas comes with an EFL that outlines the base charges, energy rates, additional fees, and early termination penalties. The advertised rate is usually based on specific usage levels, so if your actual usage is different, your effective rate could be much higher.
Know Your Average Monthly Usage. Plans are often structured to benefit certain consumption patterns. A plan that looks great at 1,000 kWh per month may not be the best deal if you consistently use 800 or 1,200 kWh instead. Understanding your usage level is crucial for determining a good energy rate and finding the best deals in the marketplace.
There are a variety of energy plans available that cater to different needs, including renewable energy preferences and budget considerations. Comparing different electricity providers and their plans can help you find the best choices based on your specific requirements.
Account for TDU Delivery Charges. No matter which provider you choose, your utility company charges a fixed fee for maintaining the power grid and delivering electricity to your home. These costs are set by the Public Utility Commission of Texas and apply to everyone in a given service area.
Beware of Promotional Gimmicks. Plans that advertise free energy periods or large bill credits often compensate with higher base rates or hidden fees. Many consumers end up paying more because they don’t use electricity in a way that maximizes the plan’s benefits.
Electricity prices in Texas fluctuate based on demand, weather conditions, and natural gas prices. On average, residential electricity rates as of 2024 are:
Consumers can find the lowest energy prices by comparing different providers and plans, which can help them save significantly on their electricity bills.
While many providers advertise lower prices, real-world usage data shows that the actual costs consumers pay are often up to 45% higher than the listed rate due to hidden fees, bill credits, and other pricing tricks.
GridHacker helps you navigate the confusion and find the best electricity service for your home or business. Unlike other platforms that promote promotional gimmicks, we provide real pricing based on your actual usage.
Our platform makes it easy to compare electricity rates, filter out plans with hidden fees, and enroll in minutes. You’ll see transparent pricing, no-markup offers, and the ability to switch hassle-free. GridHacker also provides detailed information about electric providers and energy providers to help consumers make informed decisions.
If you’re ready to find the best electricity rate in Texas, enter your ZIP code and compare plans today.
