“Enter your zip code, and compare Texas electricity rates instantly.” The internet is filled with countless energy websites that boast just this. Is it really that easy to compare Texas electricity plans, choose a provider, and cut your energy bill? Is it really as quick as they say? And if it is, which of the numerous energy websites do you use? Do they offer the same plans? Do they all essentially do the same thing, or is one better than another?
Texas electricity rates: what is the cheapest electricity company in Texas?
Texas is one of several states in the U.S. with deregulated energy. This means that Texas residents and companies have the ability to choose their electricity provider instead of simply being “assigned” one based on your zip code. While this creates the obvious benefit of being able to shop for the best electricity plans from the best companies, where do you start? After all, there are nearly 300 electricity providers in the deregulated zip codes of Texas alone. (And each of the companies has several plans!) Gexa, Reliant, TXU, Cirro, NRG, and 295 others: do you really want to call each one and compare plans before you choose?
To make it even more complicated, each Texas electric company has different terms and conditions for their plans. Do you really know if an energy plan is better just because it offers a “super saver” price that is 1/10¢ cheaper than plans from other companies?
When it comes to shopping for the cheapest energy plans in Texas, there’s one key problem: there is no “best power company” for a zip code or “cheapest energy rate” in Texas. Depending on your particular electricity use habits, the best plan for you might not be the same as the best plan for anyone else in your zip code–or even your neighbor.
The power to choose and the power to lose
PowerToChoose.com is The Texas Public Utilities Commission’s official website that helps people compare the energy options from the suppliers in Texas. However, the site has come under considerable criticism for a number of reasons. Ultimately, it all comes down to a fatal flaw in the program’s very design. As it says on their website, “This website is available to all electric providers to list their offers for free.” While this is intended to make them an “unbiased electric choice website,” in actuality, it just opens the door for any fly-by-night electricity provider to post misleading plans that are bound by unrealistic conditions.
Over the years, lots of Texas energy websites have popped up mimicking the concept of Power To Choose. Simply go to the site, enter your Texas zip code, and get a listing of available power plans. Many of these, however, have the same problems. Do they make sure you understand the terms and conditions attached to the plans they advertise? Do you have any way of knowing the level of service you can expect from the provider? These sites may claim to be the proverbial “one-stop shop,” but you would be well advised to do considerable research on the energy options you find there. Do they take into account reviews and testimonials? Some may be great options, but you would never know simply by looking at the list of energy plans on the site. What good is a “super saver” plan if the service is horrible?
That’s not to say all these sites are bad–we even have one of our own! buy.energy gives you the ability to compare energy prices available in your Texas zip code, but with one important difference: the unparalleled service TruEnergy customers know and love! Other power companies sign you up and then forget about you until next time. TruEnergy is here to help in any way we can, whether you’re looking at our site for the first time or you’ve been with us for 10 years! Call us now, and learn how we can save you money on your electric bill.
How much electricity you use – the single biggest piece of the electric puzzle
Your electricity usage affects your bill in two main ways. The first is simple: the more energy you use, the lower the rate. Think of it like shopping at a wholesale store. If you buy the 6-pound bulk package of crackers, it will be cheaper (per unit) than the single-serving packages at the corner store. The same is true with electricity. A giant Texas manufacturing plant that runs its equipment 24/7/365 will have a lower energy expense than a 500-square-foot efficiency that sits vacant all but a few nights a month.
The second way electricity usage affects price is more complicated. When you shop for plans, you will often see that an energy price is based on a particular usage, 1,000 kwh, for example. Usually, this is not simply a matter of the above-mentioned “discount for buying in bulk.” Often, it is also a matter of meter charges and flat fees that are averaged into the energy rate. However, unscrupulous companies have been known to use this deceptively. They may charge you a certain price if you use exactly 1,000 kwh for the month. If you use 999 or 1,001, the price changes drastically. Unfair, maybe. But it’s perfectly legal in Texas. They can charge you however they please just as long as they have it printed clearly in their terms & conditions (in fine print, of course).
These are just the most common ways electricity use can affect rate, but there are other things that sometimes happen.
- Did you just guess when you entered your electricity usage in the site? Did you base it on one or two month that may have had particularly high (or low) usage? If the provider offers you a plan based on one certain usage bracket, and if you actually use a different amount of electricity for the year, your price can change.
- Was there some unusual circumstance that made your energy usage especially high or low for one month? Some companies will charge you a penalty just for not using your “typical” amount of energy for the month.
The lesson here is that it’s imperative for you to know exactly how much power you typically use. Also, make sure you know how the electricity provider charges you, especially the restrictions and limitations they tack onto the rates they offer.
Can your electricity rate change from month to month
Fixed rate electricity plans in Texas: security for the worst of times
Let’s say your electricity provider charges you 8¢ per kwh. Let’s also say there are no crazy strings attached and no fine print. If you use 500 kwh of electricity in a month, they charge you $40. If you use 1,000 kwh, they charge you $80. You use 2,000 kwh… $160.
Seem simple? This is a fixed energy rate, and (aside from the possibilities of restrictions, fine print, and extra fees), it really is that simple.
If you see a story on the Texas or national news that energy prices have doubled overnight because of a winter storm, you don’t have to worry. Your plan will still have the same price this month.
However, if something happens and energy prices go down (hey, it occasionally happens), you don’t get to take advantage of the savings.
For most people, fixed-rate plans provides the security they’re looking for. People in Texas still remember the winter storm in February 2021 that left some people with energy bills for thousands (or tens of thousands) of dollars for just a few days of usage. Quite simply, a fixed-rate plan would have prevented that. Sure, that was a rare event. What is the likelihood that it will happen in Texas again this winter? or next winter?
Is that a risk you want to take? If you’re not content with that, a fixed-rate plan is probably just what you need.
Variable-rate electricity plans: potential savings with a little risk
Oil and natural gas are commodities, and their prices go up and down just like anything on the stock market. Energy prices, therefore, go up and down with the market, sometimes daily, and sometimes multiple times a day. This is why companies change their rates so frequently–they’re constantly trying to predict what is going to happen next.
When a Texas provider charges a fixed rate, they’re going to hedge their bets. Are the market prices going to go up tomorrow? next week? next month? The electricity provider is going to take all this into consideration and offer you an electricity price that is a little higher so that they will still make money off of you. Are they hedging their bets enough? too much? Only time will tell.
Though like with a casino, it’s safe to say that “the house” will usually win.
For this reason, some people prefer an plans that are tied to the actual market prices. With a variable-rate plan (commonly an index-rate plan), you pay the current market price plus a set amount. If the energy market goes up or down (even for a few hours), your price will do the same. At any given time, what you are paying is precisely in line with what the market is doing.
The benefit of this is that it keeps the electricity provider from skewing the odds in their favor and getting extra money from you. The risk: the previously mentioned bills for outrageous amounts when energy rates skyrocket.
Month-to-month energy plans: uncertainty at its worst
A variable rate changes constantly, but it is still tied to the market. Your electricity price will always be the current market price plus the set amount added. Although the rate itself changes, the provider can’t change the way it’s calculated.
When your electricity contract ends, however, you will almost certainly be moved to an out-of-contract rate that is typically much higher than any other rate. Why? Just because you’re out of contract. When the electricity provider is not bound by the terms of their contract, they can pretty much charge you whatever they please.
Some people in Texas just don’t like electricity contracts, and this would be the only real benefit of such a “plan.” You’re not bound by anything, and you can change electricity providers any time you want.
Is this freedom really necessary though? If you don’t like your electricity provider, why wait? Switch now. If you do like your provider, why hold out? Go on and lock in a lower electricity rate.
Is a fixed rate or a variable rate better?
Both of these types of energy plans have advantages and disadvantages. Although there are times when a variable rate is a better fit for an electricity user, TruEnergy generally recommends fixed-rate plans.
Think about it this way: with a variable-rate plan, there is the potential to save a little money. Even aside from how well the electricity provider hedges their bets, you can always save money in the event that the market rates drop a little. Will this add up to a fortune? Probably not, but every little bit matters. The problem is that, while you may save a little with an index rate, you risk losing a lot. Granted, the odds are in your favor that another catastrophe won’t happen, but is the potential of a few dollars worth the risk of thousands?
Most of our Texas customers don’t think so, and that is why we typically recommend fixed electricity plans. Either way, though, we can help you find the electricity plan that’s right for you.
Texas electricity plans: companies with additional product offerings
With prepaid plans, you put a certain amount of money into your account, and that buys you a certain amount of energy usage. You can track your electricity use online at any time and add additional funds as necessary. This is great for people who don’t want to pay an electricity deposit or who want to track and adjust their electricity usage to fit a particular budget.
Free nights and weekends
Some plans charge one price during peak times and then a discount during off-peak times. In addition to offer savings for those who can adjust their electricity load accordingly, it takes pressure off the electricity grid at the times it is strained the most. These plans can save you money if you carefully plan when you use electricity, but if you’re not watching out, the higher peak rates can translate to a lot of money!
Green energy plans
Renewable energy plans such as solar and wind are becoming more and more popular for lots of customers in Texas. Not only do these green energy plans help out the planet, but they can qualify you for tax incentives.
If your home or business has solar panels, you can sell excess energy back into the grid. In a lot of cases, this can also help you “store up” the electricity you generate when it is sunny outside, so that you have some to use at night or even just when it’s cloudy.
Many customers find it difficult to budget when their monthly electricity bills are huge in the summer and winter and tiny in the spring and fall. With average billing, you pay a fixed amount per month.
Term lengths: do you want to be locked in to a lengthy contract with the provider?
Texas electric plans come with a wide array of term-lengths: month-to-month, 6-month, 1-year, 3-years, 8-year, and anywhere in between. Of course, each of these term lengths will have a different rate associated with it. So how do you decide?
The first thing you might notice is that a lot of times a longer term will come with a higher electricity rate. This might seem counter-intuitive when the provider is otherwise charging you less when you buy electricity in bulk. Shouldn’t they charge less if you’re agreeing to a longer term?
In reality, it all comes down to the way the provider is “gambling” on the energy market. Are electricity rates in Texas going to stay the same over the next 3 months? Generally speaking, they will, so the provider will often offer rates that are close to the current market prices. However, what is the electricity market going to do over the next 3 or 4 years. Over a longer time frame, there’s a much higher chance that energy rates will go up. For this reason, the provider is going to want to offer you a price that is little higher to make sure they are still making money several years from now.
If this is the case, though, why would you want to sign up for a longer term?
Quite simply, this is also because Texas energy prices are likely to go up over time. If you only sign up a few months at a time, your cost is going to be changing regularly. If market prices go up, your price is going to go up when you sign your next contract in a month or two.
But if rates are favorable in Texas right now, you can lock in that great plan and know it can’t go up for a long time! The key to this is to find the right time to sign up. Since market prices are constantly changing, you have to watch the electricity market so that you can get in when the rates are at their best… or better yet, TruEnergy’s experts can do this for you!
Switching an existing service to a new provider
With Texas electricity deregulation, switching providers is easy. All you have to do is contact an electricity provider and sign up with a plan. They will switch your electricity service over, and you will start receiving your bills from them instead of your old provider. The switch itself really is that simple.
The complicated part lies in all the details you have to watch out for when switching.
The number one problem you can have when switching providers is not knowing when your current electricity contract ends. If you are currently in a contract with Provider A, and you sign up for a plan with Provider B, you are almost certainly going to be charged a penalty from Provider A for breaking your contract. These early termination fees (ETFs) are different for each provider, but they can sometimes be into the thousands of dollars depending on the size of your account and the length of the broken contract.
Above all else, make sure you know when your current contract ends. You can sign up for another energy plan; just make sure it’s not set to start until your current contract expires.
Myths about switching electricity providers
“You will be charged more for utility services with a different company”
When Texas was initially deregulated, the electric utility companies were no longer allowed to handle the retail end of the business. Most of them, therefore, essentially split the company, creating a separate enterprise that would deal with this aspect. For each service area, these new electricity companies became the “default providers” for the different distribution companies unless and until a user switched to another one. Lots of people have mistakenly thought that, by switching to a provider that’s not affiliated with the distribution company, the companies will charge more for the transmission fees. This wouldn’t even be legal, so you don’t have to worry about an increase.
“Your utility won’t give you as good of service with a different company”
Along the same lines as the previous myth, some people think that the distribution company gives better service customers who are with a particular provider. If your power is out, for example, there is a myth that it will take longer to get power restored if you have switched electric companies. Again, this would be illegal for them to show this kind of preference for certain providers. More than that, though, it really wouldn’t even be possible. If there’s a power line down in your area, the power is out for customers who use any number of different providers. There’s not a separate power line for each electricity company, so the company physically can’t turn the power on only for certain customers.
Connecting a new electric service: moving to a new area, new homes, new businesses, new zip code, or new locations
Are you moving to Texas from another state? Did you just buy a house? Rent an apartment? Start a new business? Open a new location? Switching providers is one thing, but what if you’re trying to get electric service set up for the first time?
When a provider lists a particular rate, it is often based largely on your usage. However, if you are connecting power at a new location, you don’t have a usage history, so how do you get rates?
There are a few ways to do this. The easiest way is for the provider to calculate it from the previous occupant’s usage. Granted, your usage patterns may be a little different, but it should be close enough to give the provider a decent estimate of what your usage will be.
There are situations where this won’t work though:
- It is a newly built location with no usage history.
- You will be using the location for a significantly different amount of time than the previous occupants–maybe the business will be open 24 hours a day instead of 8, or the apartment will only be used a few days a month.
- You will be using a significantly different amount of energy at any one time–maybe you will be operating a lot of powerful equipment when the previous occupants only needed the lights on.
In these cases, the provider can still offer rates based on an estimate. This might be based on your usage at a previous Texas location, modified for difference in the size of the location. This could also be based on the previous occupant’s usage, adjusted for the estimated difference in how you will be consuming energy.
Turning on a new electric meter and activating a de-energized meter
The other issue that can come up is when you’re trying to energize an electric meter. This could be a new meter at a new construction, or it could be a meter that has been turned off for some time. In either case, much of the process is the same as when you move into any new location.
The key difference is that you will also need a permit from the city or county before the meter can be activated. To get this permit, you will have to have an inspector go to the location to check out all the connections before power is turned on. If it is a new build, they will want to make sure the electric work has been done properly and safely. If the power has been turned off for a while, they will want to make sure everything is still in working order.
While this may seem like a pain, consider the possibilities if this didn’t happen: energy is connected to a building with faulty wiring, and no one is around to put out the fire!
What electric company services my address, and can I switch my utility?
In Texas, there are five main utilities that service the deregulated parts of the state: Oncor, CenterPoint, TNMP, AEP North, and AEP Central. While you can freely switch providers if you live in a deregulated area, you cannot switch distribution companies. For any given area, there is still only going to be one public utility. It may seem like this defeats one of the primary intents of deregulation–to eliminate energy monopolies–but there is actually a good reason why there should only be one distribution company.
First, it’s important to understand exactly what the TDU does. The retail provider handles all the billing and customer service, but the utilities own and operate all the lines and poles that get the electricity to you. If there were multiple utilities in a certain area, they would each have to have their own systems in place. Instead of one set of power lines running down your street, there would be two… or three… or ten. Every time another utility moved into the area, they would be digging up streets to bury their lines. If an electric utility company went out of business, would they tear out all of their poles, or would they find it cheaper to shut the power off and leave them where they are?
In cases like this, a monopoly is necessary, even if not ideal.
So no, unfortunately you can’t shop around for the best utilities like you do with your retail provider. The only way to change distribution companies would be to move to another company’s territory.