Electricity usage is becoming more scrutinized with rising energy rates and higher energy bills.
Many Texas residents have the freedom to choose their energy company thanks to deregulation. In fact, there are thousands of energy plans in Texas.
We believe that the best electricity plan is not simply the cheapest electricity rate on the market on any one given day. Texas energy plans are designed to dovetail with your lifestyle and budget.
Let’s look at how to assess Texas electricity plans so you can get the right plan for your individual needs.
Energy Plans Texas: Who Can Choose?
Some 85% of Texas residents live in areas with a deregulated energy market. There are more than 130 electric providers in Texas, known officially as Retail Electricity Providers or REPs. These Texas electric companies vie for customers through the Lone Star state’s open energy market.
Not everyone can choose their Texas electricity provider. The Public Utility Commission of Texas (PUC or PUCT) assigns a provider for Texans living outside the deregulated energy market. For example, Austin Energy supplies most Austin residents with electricity because their ZIP code falls outside the deregulated area.
Texas Electricity Rates: Comparing Energy Plans
Before looking for cheap electricity prices, it’s essential to understand your energy usage and how the electric companies bundle their electricity plans.
There are many buzzwords like green energy plans, savers, and Electricity Facts Labels, or EFLs. Let’s understand the basics before looking at some of the deals energy providers offer.
Fixed Rate vs. Variable Rate Plans
One of the most important decisions that will influence your electricity bill is whether you want a fixed-rate vs. variable-rate plan.
A fixed-rate plan is when you pay the same price for each kilowatt-hour (kWh) of electricity you use throughout your contract. Think of using electricity the same way as filling your car with gas. If the gas stays the same price, then you know how much it costs to fill the car and how much the gas costs to drive, say, 100 miles.
Electricity is the same with a fixed-rate deal. You know how much you’re paying for each kilowatt you use. You know how much it costs to switch on the air conditioning and what electricity bill to expect. Fixed-rate deals are great for budgeting.
A variable-rate plan has a movable kWh rate that changes with market conditions. Electric companies set the price according to the market, and those prices can go up or down. In practical terms, that means you could pay more one month than another despite using exactly the same amount of electricity.
Think again about filling your car with gas. One day, prices are low, and filling it with gas is cheaper. The following month, prices rise, and although you use the same amount of gas, you pay more for it. This is the world of variable-rate plans. The upside is that they often have short contracts without cancellation fees, making them appealing for flexibility.
Prepaid Plans vs. Alternative Payment Options
Prepaid plans bring electricity services with maximum flexibility. There are usually no credit checks with these month-by-month plans that require people to pay in advance for their electricity. The kWh rate for prepaid plans is typically variable, so your energy charges can vary.
Electric companies usually offer various payment options, some with credit checks. These include:
- Over the phone
- Online through apps or a website portal
- Autopay that automatically debits your card every month
- By checks in the mail
- At pay stations
Early Termination Fee vs. Cancellation Fee
These two terms are interchangeable and essentially mean the same thing. An early termination or cancellation fee occurs when someone wants to leave their electric company before the contract ends. Fixed-rate contracts often have higher early termination fees, whereas many variable rate plans don’t have them.
Early termination fees are usually a fixed amount, anything from a few dollars to several hundred dollars, or calculated on a charge per month remaining on the deal. These fees may apply if switching companies — check your current provider’s conditions before changing.
Checking for cancellation and early termination fees is essential before signing any electricity plan.
Understanding the Jargon of Energy Plans in Texas
We’ve looked at some crucial technical aspects of energy plans in Texas.Next are some of the energy plan types you’ll encounter and need to understand to ensure you pick the most appropriate deal.We’ve looked at some crucial technical aspects of energy plans in Texas. Next are some of the energy plan types you’ll encounter and need to understand to ensure you pick the most appropriate deal.
Green Energy Plans vs. Renewable Energy Electricity Plans
Green energy, sustainable sources, and renewable energy are commonly used for advertising energy plans.
Some electric companies offer electricity sourced from 100% renewable energy sources like wind power and solar. These firms often specialize in renewable energy and only cover certain areas where they can meet their 100% claim.
Other electricity providers will talk about green energy plans with a certain percentage of renewable energy — you’ll need to check to see how much it is. Another option is to pay a little extra each month, and your energy provider will source your electricity from renewable energy sources.
Paying extra means your electric company will pay a renewable energy generator such as solar energy from a solar farm for your electricity use instead of paying a natural gas power plant.
Free Weekends vs. Free Evenings or Free Nights
Free electricity sounds fantastic and signing up for one of these deals is very tempting. But these offers usually fit some lifestyles better than others.
Many of these free time-of-use (TOU) products give specific hours for free electricity, often up to a certain amount, and if you use a certain amount of electricity at other times. In other words, you may need to pay for electricity at different times to get free electricity later. This paid-for electricity may be at a higher rate than a standard deal that perhaps suits your needs better.
Free weekends or nights are good options for people who can shift most of their electricity use to the free window, from around 40% upwards. That would mean using washing machines, dishwashers, electric water heaters, and more during the free hours, perhaps using plug-in timers to turn them on.
Companies may also provide “free” electricity by awarding bill credits during the times you pay for electricity use. The bill credits are later used to give the “free” component at night or on weekends.
You’ll most likely still be charged a certain number of cents per kWh used during free periods to pay the utility company that delivers electricity to your door. This utility charge is different from your electric company’s charges and helps pay for the upkeep of the power grid.
What Is a Utility Company’s Role in the Texas Energy Market?
While most people in Texas can choose their electricity company, they cannot change their utility company. These utility companies are also known as Transmission and Distribution Utilities (TDUs)
Their role is to deliver electricity to businesses and homes through a power grid. Utilities also take care of the grid‘s poles and transmission wires and restore power after power outages.
The principal TDUs in Texas are:
- CenterPoint: Houston
- AEP Texas: Corpus Christi and Abilene
- TNMP: Glen Rose, Lewisville, Leonard and Pilot Point
- Oncor: Dallas, Fort Worth, and Arlington
Read the Electricity Facts Labels (EFLs)
Electricity Facts Labels are your friends! EFLs contain all the details of all the electric energy plans in Texas. Every electricity provider must deliver an EFL with every energy plan. If you can’t see one, don’t sign up.
Among other things, Electricity Facts Labels tell you about a plan’s:
- Early termination fees
- Deposit amounts and refunds
- Contract term length
- Hidden charges such as base charges or electric service charges
- Minimum usage levels
Pro tip: Minimum usage levels reward heavy electricity users with low kWh prices. However, should you fail to meet minimum usage levels, you may pay a much higher kWh price for all the electricity you have used.
Help Is Here: Searching for Energy Plans in Texas
Congratulations! You’ve put in the heavy lifting for understanding energy plans in Texas. Now, it’s time to search out and compare real-life examples.
Pro tip: Know your average monthly energy usage before you start shopping around. Ask your realtor or landlord for your new property’s levels if you are moving to Texas.
Energy plans in Texas are advertised in kilowatt-hours (kWh). In this exercise, we’ll look for electricity plans for 1,000 kWh usage every month. It’s worth remembering that in 2020, the average Texas household used 1,132 kWh of electricity every month.
The average monthly usage is estimated in the following tiers:
- 500 kWh (low usage)
- 1,000 kWh (average usage)
- 2,000 kWh (high usage)
Remember to Use Your Power to Choose
The competitive nature of the Texas electricity market means there are always lots of privately-owned websites and advertisements trying to capture your business. Not all of them show all electric plans.
We recommend using the PUCT’s independent website called Powertochoose.org to compare energy deals in Texas.
Start by checking if you live in a deregulated area by entering your ZIP code. Then, use the filters to help you navigate the plans that appear.
Pro tip: Our Power to Choose guide will help you use the website.
Always read every deal’s Electricity Facts Label before signing any contract. We’ll compare a few example deals below.
Please note that all information is subject to change without notice and is beyond our control. The cases are for illustration only and have no bearing or make no judgment of any companies or energy plans mentioned.
Energy Plans Texas: ZIP Code 77007, Harris County, Houston
We’ve imagined a family of two adults and three children living in Harris County, Houston. They want:
- 1,000 kWh of electricity every month
- A stable, long-term deal while the kids are growing up so they can budget accordingly
- A reliable company with good customer service
- Some renewable energy in the mix
We found the following among more than 25 deals.
Tara Energy has a solid 3-star customer rating and offers a 60-month fixed-rate deal at 14.9 cents per kWh with 25% renewable energy. This is matched by Amigo Energy and Just Energy.
Frontier Utilities has a 36-month contract at the same kWh rate but only has a 1-star rating. You can obtain important standardized information that will allow you to compare this product with other offers. Contact (Frontier Utilities, 1-877-437-7442 or www.frontierutlilities.com).
Constellation has a 14.9 kWh contract, a 3-star rating, and a 36-month deal, but only 20% renewable energy. You can obtain important standardized information that will allow you to compare this product with other offers. Contact (Constellation, 1-888-900-7052 or www.constellation.com).
The early termination fees are around the same, from $175-200, apart from the low cancellation costs from Constellation at $99.
Our family may wish to lock in that 60-month deal from Tara Energy or Amigo Energy to get a reliable company and a great price over the long term. The high cancellation fee is less of a worry for them because they’re not looking to switch companies often.
Energy Plans Texas: ZIP Code 76103, Tarrant County, Fort Worth
Next up, we have imagined a young couple that is spending up to six months in Tarrant County. The wife is on a temporary work placement by her company while her husband plans to sculpt and paint at home.
Their main concern is the environment and flexibility rather than price. They don’t want to pay a cancellation fee because the wife may have to go back to office headquarters at a month’s notice. As such, we looked for variable rates with no cancellation fees in this scenario.
Deals ranged from 16.4 to 32.4 cents per kWh, higher than the fixed rate prices for Houston and also subject to change, be that up or down. There are no cancellation fees, and the renewable element they craved flits from 12% to 100% green energy.
Energy Texas’ 100% renewable deal at 20.5 cents per kWh may be best for them, despite the company’s 2-star rating — the couple won’t be in Texas too long. If they decide it’s the price that counts, 5-star rated NEC’s 16.4 cents per kWh is attractive but with the lowest renewable element. You can obtain important standardized information that will allow you to compare these products with other offers. Contact (Energy Texas, 1-855-461-1129 or www.energytexas.com or NEC Co-op Energy, 1-855-632-7348 or www.neccoopenergy.com).
As you can see, there are always pros and cons to consider before deciding which deal will suit your circumstances best.
Energy Plans Texas: ZIP Code 76633, China Spring, Waco
Our final example is a busy company executive often away on business. They estimate their China Spring home in Waco uses 1,000 kWh of electricity a month but they don’t really know.
Their mantra is that the bottom line is the most important and to look for the lowest prices possible.
Flagship Power seems to have won the day with its fixed-rate 13.6 cents per kWh deal that grabs our exec’s attention, and they sign up for the three-year contract without checking any details.
You can obtain important standardized information that will allow you to compare this product with other offers. Contact (Flagship Power, 1-888-832-4081 or www.flagshippower.com).
However, after a couple of months, they notice their bills are more expensive than they thought, considering their energy usage.
A quick bill check shows their energy usage was more like 300 kWh each month because of being away on business so often. Unbeknown to them, they have signed up for a minimum usage deal. This deal’s Electricity Facts Label shows that the kWh price is 19.41 cents per kWh, and the 13.6 kWh price is achieved by two means.
Firstly, the exec needs to use 1,000 kWh each month. When that happens, the electric company applies a “usage refund,” which lowers the overall cents per kWh price. The exec’s failure to reach the minimum usage level means the smaller amount of electricity they use is charged at a higher price than the “minimum use” advertised cost. Our businessperson hasn’t fulfilled their side of the bargain.
Minimum usage deals can work in people’s favor, especially those who are meticulous about their energy usage and levels. The Flagship Power deal is excellent for some people but perhaps not the appropriate one for our exec to have chosen. They will have to adapt to the billing or pay a cancellation fee of $20 for each month remaining on the contract to leave.
Of course, we chose this example to highlight the required care when considering switching electric companies. It’s vital to know your energy usage and patterns to truly pick the best energy plan.
Energy Plans in Texas: Get the Best Electricity Rates
With more than 130 electric companies and multiple deals, it’s easy to get confused by the sheer amount of energy plans in Texas.
However, taking your time to compare products and understand what’s best for your lifestyle can go a long way to sorting the wheat from the chaff. Think about what’s important to you in your electric company. Is it renewable energy? Fantastic customer service? Price stability? Or perhaps free electricity on weekends?
We’d like to think that better service and the best products start here, at Amigo Energy. Get in touch and find out.
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