Electricity plans in Texas aren’t one-size-fits-all. As a consumer in a deregulated market, you get to decide not only which company supplies your power but also how you’ll pay for it. The two most common choices are fixed-rate and variable-rate electricity, and each come with tradeoffs.
Below, we’ll discuss how these fixed-rate and variable electricity plans work, compare their pros and cons, and highlight why many Texans choose fixed-rate stability with Amigo Energy.
Fixed vs. Variable-Rate Electricity
Here’s a quick comparison of fixed-rate and variable electricity rates.
Price Stability
Fixed-rate plans keep your bills steady because your kWh price doesn’t change. Variable-rate plans shift monthly, which means costs can be lower in some months and higher in others.
Risk Exposure to Market Spikes
Fixed-rate plans protect you from sudden wholesale price surges. Variable-rate customers, however, are vulnerable to unpredictable jumps.
Texas Legislation on Energy Pricing
After winter storm Uri in 2021, Texas lawmakers passed HB 16, banning retail providers from offering wholesale-indexed residential plans. The law prevents households from facing catastrophic bills when wholesale prices spike.
Contract Terms & Early-Termination Fees
Fixed-rate contracts usually last 12–36 months and include early termination fees of $150–$200. Variable-rate plans are typically month-to-month with no ETF, though some come with higher base charges.
You can find your contract terms and early-termination fees by reading your Electricity Facts Label.
Learn more about short vs. long term contract terms.
Renewable Options (Green Energy)
Amigo Energy lets you add renewable energy options to fixed-rate plans, so you can keep steady prices and support clean energy.
Who Each Plan Fits Best
Fixed-rate plans suit long-term renters, homeowners, and families who want steady bills. Variable-rate plans work well for renters, students, or people who don’t mind watching prices and changing providers when bills go up.
What Is a Fixed-Rate Electricity Plan?
A fixed-rate plan keeps your electricity price per kilowatt-hour (kWh) the same for the entire length of your contract — usually 12, 24, or 36 months.
Pros of Fixed Rate Electricity Plans
Fixed-rate plans offer a budget certainty friendly option, since your kWh price doesn’t change when wholesale markets swing. You gain peace of mind because you don’t need to monitor electricity rates every month.
Many fixed-rate plans allow you to add green energy, enabling you to support renewable power while maintaining stable bills. This is helpful for retirees on a fixed income or families who need to plan a set budget each month.
Since your rate doesn’t change, you won’t face surprise jumps in your bill, even if summer prices double.
Cons of Fixed-Rate Electricity Plans
On the other hand, your rate is locked in even if market prices fall. Fixed plans also include early termination fees, typically ranging from $150 to $200, if you terminate your contract before its end date.
Finally, they require a commitment of at least 12 months, which may not fit every household’s needs. For example, if you sign a 12-month plan but need to move before the year is up, you may have to pay a penalty.
What Is a Variable-Rate Electricity Plan?
Variable-rate plans don’t guarantee a steady price. Instead, your kWh rate changes monthly depending on wholesale costs, seasonal demand, and market trends.
How Variable Rates Are Set Each Month
Rates change based on the wholesale market, high demand in certain seasons like Texas summers, and the provider’s fuel and operating costs. In some cases, variable plans can save you money for several months when there’s energy price stability. But when the market swings, your bill reflects those changes directly.
Pros & Cons of Variable Rate Electricity for Consumers
The biggest benefit of variable-rate plans is flexibility. Most are month-to-month, so you can change providers anytime without paying a fee. You may also pay less when prices drop. That’s why renters, students, and people who don’t plan to stay long often pick these plans.
The downside is the risk. Bills can jump during very hot weather or storms, and changing prices make it harder to stick to a budget. Over time, costs may end up higher if prices keep rising. For example, you might save $20 in the spring but then pay $100 more in the summer.
How Electricity Pricing Works in Deregulated Markets
In Texas and other deregulated states, the utility company doesn’t set your electricity price. Instead, retail electricity providers (REPs) — like Amigo Energy — decide what you’ll pay for the power you use.
The utility, known as a transmission and distribution utility (TDU), delivers power to your home and is responsible for maintaining the poles, wires, and meters. The fees they charge are set by the state and show up on your electricity bill no matter which provider you choose. Because of this setup, two neighbors on the same street can end up paying very different monthly bills depending on the plan they pick.
Texas as a Leader in Energy Deregulation
Texas let people start picking their own electricity company in 2002. Before that, everyone had to use the same utility. The change was meant to help people save money on electricity by shopping for better prices and service.
Today, Texans have lots of choices. But more choices can also be confusing. A fixed plan keeps your bill the same each month, while a variable plan can go up or down depending on the market.
Real-World Example: Energy Bills During a Price Spike
When Texas froze in February 2021, electricity prices didn’t just climb — they hit the market’s ceiling: $9,000 per megawatt-hour. For comparison, that’s hundreds of times higher than the usual $30 rate.
The numbers turned into life-changing bills. One Houston-area family, who had never paid more than $150 for a month of power, suddenly owed over $7,000 in less than a week. Lisa Khoury, another resident, faced an even harsher blow: $9,340 charged for just seven days of service. Her typical bill fell between $200 and $250. [4]
These stories show the big risk of wholesale-indexed plans: they may seem cheap most months but can suddenly become very expensive. Fixed-rate customers, on the other hand, were spared those crushing surprises.
How to Decide if a Fixed-Rate or Variable-Rate Plan is Best for You
When deciding between fixed-rate or variable-rate plans, think about what matters most to you: Do you want steady bills each month? Can you commit to a contract for one to three years? Are you okay with taking some risk to maybe save money in the short term? Also think about whether you’re staying in your home long-term or planning a move. This will help you choose electricity plans
If stability and budgeting are top priorities, fixed-rate plans are often the safer choice. If flexibility matters more, a variable plan may be worth considering. One way to decide is to look back at your own electricity bills over the past 12 months. If seasonal swings stress your utility budget, a fixed plan could make life easier. If you moved recently or expect to move soon, a variable-rate plan might keep your options open.
Why Texans Choose Amigo Energy Fixed-Rate Plans
Amigo Energy is a leading Texas energy provider with a variety of plans. Here are some of the options you’ll encounter.
- 12-Month Rate Lock: A one-year plan provides cost certainty without a long commitment, making it a good option for renters or households in transition.
- 24-Month Green Fixed Plan: This plan keeps your price steady and adds green energy. It’s a good pick for families who want to help the environment and stick with a plan for two years.
- Same-Day Service & Easy Online Sign-Up: Switching providers with Amigo Energy is simple. In many cases, your new service can begin the same day, so you can enjoy convenience and cost certainty right away. Learn more about same-day electricity in Texas.
Explore all of our Texas electricity plans and rates here.
Texans Tailored Plans
Fixed-rate plans designed just for Texans keep your electricity costs predictable and your budget happy!
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Fixed-Rate vs. Variable-Rate Electricity FAQs
Can I switch from a variable to a fixed plan without paying fees?
Yes, if your variable plan is month-to-month. Always review your current provider’s terms.
What happens if market prices drop while I’m on a fixed electricity plan?
You’ll keep paying your contracted rate until your term ends. The tradeoff is protection against future spikes.
How often do variable electricity rates change?
They typically adjust each month based on wholesale market shifts and seasonal demand.
Are fixed-rate plans always more expensive at first?
Fixed-rate electricity plans are not necessarily more expensive. Some fixed plans start slightly higher but can save you money long term by avoiding sudden market spikes.
Does my fixed rate include delivery charges?
No. Delivery fees are set by your local TDU and apply to every customer, regardless of provider or plan type. Learn more about TDU delivery charges.
Find an Amigo Energy Plan That’s Best for You
The choice between fixed and variable electricity comes down to your priorities. If predictable bills and long-term security matter most, Amigo Energy’s fixed-rate options deliver peace of mind. If you value short-term flexibility, a variable plan may be the better fit.
Ready to save money on electricity? Compare residential electricity rates here.
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