Texas Electricity Rates: How to Pay Less

Texas is not like other states when it comes to electricity. In most of the country, you get one utility company, one rate, and zero options. In Texas, you can choose from over 130 retail electricity providers competing for your business. That competition means real savings are on the table — but only if you know how to navigate a market designed to confuse you.

The average Texan pays between 15.69 and 16.18 cents per kilowatt-hour in 2026. That translates to roughly $177 per month statewide, though your number could land anywhere from $158 in Dallas to $197 in Houston. In summer, bills routinely climb to $200-350. Those figures are about 10% below the national average, but they've been rising fast — up 29% between 2020 and 2024.

The good news: the cheapest plans in Texas run as low as 7.6 to 8.9 cents per kWh for energy alone, or 13 to 15 cents per kWh all-in. The difference between what you're paying now and what you could be paying might be $40, $60, or even $100 per month. This guide will show you exactly how to close that gap.

How the Texas Electricity Market Works

To find the best deal, you need to understand the basic structure. Texas deregulated its electricity market in 2002, following Senate Bill 7 signed in 1999. That law broke the old monopoly utilities into three separate functions.

Generation companies produce the power. They operate natural gas plants, wind farms, solar arrays, and everything else that puts electrons on the grid. Transmission and Distribution Utilities (TDUs) own the poles and wires that deliver electricity to your home. And Retail Electricity Providers (REPs) are the companies you actually sign up with and pay your bill to.

You choose your REP. You cannot choose your TDU — that's determined by your physical location. The five TDUs in Texas are Oncor (Dallas-Fort Worth), CenterPoint (Houston), AEP Texas (Corpus Christi, south Texas), Texas-New Mexico Power (scattered areas), and Lubbock Power and Light.

Overseeing it all is ERCOT, the Electric Reliability Council of Texas. ERCOT operates the grid that serves 26 million customers and handles about 90% of the state's electrical load. It runs the wholesale market where generators sell power and REPs buy it.

Here's what this means for you: when you shop for electricity in Texas, you're shopping for a REP. The actual electricity flowing to your home is identical regardless of which provider you choose. The wires are the same. The reliability is the same. What changes is the price, the contract terms, and how likely the company is to surprise you with hidden charges.

One critical exception: not all of Texas is deregulated. If you live in a city served by a municipal utility — like Austin Energy, CPS Energy in San Antonio, or Lubbock Power and Light (for most customers) — you do not get to choose your provider. You're stuck with the local utility. Same goes for electric cooperatives in rural areas.

What Texans Actually Pay

Let's talk real numbers. In 2026, the average residential electricity rate in Texas falls between 15.69 and 16.18 cents per kWh. But "average" hides a wide range.

Monthly bills vary by city:

| City | Average Monthly Bill | |------|---------------------| | Houston | $197 | | Statewide Average | $177 | | Dallas-Fort Worth | $158 |

Seasonal swings are dramatic. A mild spring month might produce a $90 bill. July and August can push that to $200-350 depending on your home's size, insulation, and thermostat settings. If you want strategies for taming those summer spikes, check out our guide on how to cut your electric bill in half.

Your rate breaks down into two pieces:

1. Energy charge — what your REP charges for the electricity itself (7-12 cents/kWh on competitive plans)
2. TDU delivery charge — what the wires company charges to deliver it (5-6 cents/kWh)

TDU charges typically add 25-40% to your total bill, and they're the same no matter which REP you choose. This is why the advertised "energy rate" on a plan can look dramatically different from your actual all-in cost. A plan advertising 7.9 cents per kWh might really cost you 13-14 cents per kWh once delivery charges are included.

Understanding this split is essential. If you do not account for TDU charges, you will make bad decisions when comparing plans. For a deeper look at decoding your charges, read our guide on how to read your electric bill and spot overcharges.

How to Find the Cheapest Plan

The official tool for comparing electricity plans in Texas is Power to Choose (powertochoose.org), operated by the Public Utility Commission of Texas (PUCT). Enter your zip code, and it will show you every available plan in your area.

But do not just sort by price and pick the cheapest one. Here's a smarter approach:

Step 1: Get your usage history. Log into your current provider's account or your TDU's Smart Meter Texas portal. Pull your monthly kWh usage for the past 12 months. You need this number to compare plans accurately.

Step 2: Read the Electricity Facts Label (EFL). Every plan in Texas is required to have an EFL — a standardized document that shows the average price per kWh at 500, 1,000, and 2,000 kWh usage levels. This is the single most important document in your search. It includes all charges: energy, TDU delivery, base fees, and credits.

Step 3: Match the EFL to your usage. If you typically use 1,200 kWh per month, compare plans at the 1,000 and 2,000 kWh tiers. A plan that looks cheap at 2,000 kWh might be expensive at 1,000 kWh because of how bill credits are structured.

Step 4: Check the contract length and early termination fee (ETF). Longer contracts (12-24 months) usually offer better rates but lock you in. ETFs typically range from $100-200. Calculate whether the savings justify the commitment.

Step 5: Look beyond Power to Choose. Third-party comparison sites and direct provider websites sometimes offer exclusive plans not listed on Power to Choose. It's worth checking a few before you commit.

The best times to shop are April and October. Demand is lower, providers are competing for sign-ups before the extreme seasons, and you'll find the most aggressive pricing. If your contract is expiring in July, do not wait — renew or switch in the spring.

Fixed vs Variable: Which Plan Type Is Right?

This is one of the most consequential decisions you'll make. Here's how the two main plan types compare:

| Feature | Fixed Rate | Variable Rate | |---------|-----------|---------------| | Price per kWh | Locked for contract term | Changes monthly | | Contract length | 6-36 months typical | Month-to-month | | Early termination fee | $100-200 typical | None | | Price predictability | High | Low | | Summer price risk | None (rate is locked) | Significant | | Best for | Most households | Short-term situations |

Fixed-rate plans are better for most people. You lock in a rate for the contract period, and it does not change regardless of what happens in the wholesale market. This protects you from summer price spikes and market volatility.

Variable-rate plans adjust monthly based on wholesale market conditions. They often start with attractive teaser rates, but those rates can double or triple during summer peak demand. Some variable plans have surged past 30 cents per kWh in hot summers.

There's a third option worth knowing about: indexed plans tie your rate to a specific market index (often the wholesale spot price) plus a fixed margin. These can save money if you're willing to actively monitor prices and shift your usage to off-peak hours. If that sounds interesting, our guide on time-of-use electricity rates explains how to make the most of time-varying pricing.

The bottom line: unless you have a specific reason to go variable (you're selling a house, moving soon, or actively managing energy usage), lock in a fixed rate.

Major Providers Compared

With 130+ REPs in Texas, the market is fragmented. Here are some of the most established players and what they're known for:

| Provider | Typical Rate Range (all-in) | Strengths | Watch Out For | |----------|---------------------------|-----------|---------------| | TXU Energy | 14-18 cents/kWh | Largest provider, extensive plans | Premium pricing, aggressive upselling | | Reliant Energy | 13-17 cents/kWh | Strong customer service, app features | Higher rates in some areas | | Gexa Energy | 9-14 cents/kWh | Competitive pricing, 100% renewable options | Fewer plan choices | | Green Mountain Energy | 12-16 cents/kWh | Pioneer in renewable plans | Green premium on some plans | | Rhythm Energy | 10-15 cents/kWh | Transparent pricing, wholesale-indexed options | Newer company, less track record | | APG&E | 10-14 cents/kWh | Consistently low rates | Bare-bones customer experience | | Energy Texas | 10-14 cents/kWh | Simple plans, no gimmicks | Limited plan variety |

A few notes on this table. Rates change constantly, and what you see in any given month depends on your zip code, usage level, and contract length. These ranges reflect typical all-in costs at around 1,000 kWh monthly usage.

The big legacy providers — TXU and Reliant — tend to charge a premium. They're household names, they spend heavily on marketing, and they know many customers will not shop around. You can almost always find a cheaper plan from a smaller REP.

That said, cheaper is not always better. Check provider reviews, especially for billing accuracy and customer service responsiveness. A company that's impossible to reach when you have a billing dispute is not worth saving $5 per month.

Hidden Fees and Traps to Watch For

The Texas electricity market has real pitfalls. Here are the most common ones:

Variable rate bait-and-switch. A provider offers an enticingly low introductory rate, then quietly switches you to an expensive variable rate when the promo period ends. Always know when your promotional rate expires and set a calendar reminder to shop before it does.

Minimum usage charges. Some plans include a minimum usage fee — if your consumption falls below a threshold (often 1,000 kWh), you pay a flat charge that effectively raises your per-kWh rate. These plans are terrible for small apartments, efficient homes, or anyone who travels frequently.

Bill credits with usage thresholds. A plan might advertise 10 cents per kWh, but that rate only applies if you use exactly 1,000-2,000 kWh. Use 999 kWh and you lose a $50 bill credit, making your effective rate jump dramatically. This structure is extremely common and catches people off guard. The EFL will reveal these thresholds — read it carefully.

Base charges and monthly fees. Some plans tack on a $5-10 monthly base charge that does not appear in the headline rate. Again, the EFL includes these in the calculated rates at 500/1,000/2,000 kWh, which is why the EFL matters more than any advertised number.

Early termination fees. If you need to break a contract, ETFs of $100-200 are standard. Some plans go higher. Know your ETF before you sign up, and calculate whether switching mid-contract still saves money after paying the penalty.

Auto-renewal at higher rates. Many contracts auto-renew onto a variable or month-to-month plan when your term expires. The new rate is almost always worse. Mark your contract end date and shop proactively.

Winter Storm Uri surcharges. After the February 2021 grid crisis, the state authorized $2.1 billion in securitization bonds to cover the costs. Those bonds are being repaid through small surcharges on customer bills that will continue through the 2040s. You cannot avoid these — they apply to all ERCOT customers regardless of provider. But you should know they exist so you're not confused when you see them on your bill.

Renewable Energy Plans in Texas

Here's something that surprises many Texans: going green does not cost more. In fact, some of the cheapest plans on the market are 100% renewable.

Texas is a renewable energy powerhouse. Wind and solar accounted for about 30% of the state's electricity generation in 2024, and that share continues to grow. West Texas wind farms and the expanding solar installations across the state produce enormous amounts of clean electricity at very low cost.

That cheap generation flows through to retail plans. Gexa Energy, for example, offers 100% renewable plans in the 9-11 cents per kWh range — competitive with or cheaper than many conventional plans. Green Mountain Energy, the original green electricity provider in Texas, runs slightly higher but still within a reasonable range.

When a plan claims "100% renewable," it means the provider purchases Renewable Energy Certificates (RECs) to match your usage with wind or solar generation. The actual electrons flowing to your home come from the shared grid, but you're financially supporting renewable generation equal to your consumption.

If you want to go further than a green electricity plan, consider pairing it with home improvements. A smart thermostat can cut heating and cooling costs by 10-15%, and a home energy monitor helps you identify where your electricity is actually going. For full-scale home decarbonization, our whole-home electrification guide lays out the roadmap.

Texas does not have statewide net metering, which limits the financial return on rooftop solar panels. Some REPs offer buyback plans for solar customers, but the rates are often well below retail. If you're interested in solar but do not want to install panels on your roof, community solar is an alternative worth exploring. And if grid reliability is a concern — more on that below — a home battery system paired with solar can provide backup power during outages.

The Texas Grid: What You Should Know

ERCOT operates an isolated grid. Unlike the rest of the continental United States, which is connected through two large interconnections (Eastern and Western), Texas runs its own independent system. This was originally done to avoid federal regulation, and it means Texas cannot easily import or export power across state lines.

The consequences of this isolation became catastrophic during Winter Storm Uri in February 2021. When extreme cold knocked out natural gas plants, froze wind turbines, and sent demand soaring, ERCOT could not pull power from neighboring states. Millions of Texans lost electricity for days in sub-freezing temperatures. Over 200 people died.

Since Uri, the state has taken steps to improve grid reliability:

• Weatherization requirements for generators (though enforcement remains a concern)
• The Texas Energy Fund, which provides low-interest loans for new natural gas plants to serve as dispatchable backup
• Battery storage expansion, with Texas now leading the nation in grid-scale battery installations
• Securitization bonds ($2.1 billion) to cover Uri-related costs, repaid through customer surcharges extending into the 2040s

Is the grid more reliable now? Somewhat. The weatherization mandates are real, and new generation capacity is coming online. But the fundamental vulnerability remains: ERCOT is an island. During extreme events — whether extreme cold, extreme heat, or other disruptions — Texas still has limited ability to import power from outside the state.

What does this mean for you as a consumer? First, do not assume your electricity will always be available. Having a plan for extended outages is wise, whether that's a portable power station for essentials or a whole-home battery backup. Second, understand that the Uri surcharges on your bill are not going away anytime soon. And third, recognize that grid stress events can cause wholesale price spikes that will hit you hard if you're on a variable or indexed plan — another reason to favor fixed rates.

A smart home energy management system can also help during grid emergencies by automatically reducing your consumption when demand peaks, which benefits both the grid and your wallet.

Frequently Asked Questions

How do I know if my address is in a deregulated area?

Enter your zip code on Power to Choose (powertochoose.org). If plans appear, you're in a deregulated area. If you see a message that your area is not eligible, you're served by a municipal utility or co-op. Generally, the major metro areas (Houston, Dallas-Fort Worth, most of the I-35 corridor) are deregulated, while Austin, San Antonio, and many rural areas are not.

Can I switch providers without losing power?

Yes. Switching providers does not cause any interruption. The same TDU delivers your electricity regardless of your REP. The transition typically takes 1-3 business days for the billing to switch over, but your lights stay on the entire time.

What is the cheapest electricity rate I can realistically get in Texas?

The cheapest all-in rates (including TDU delivery charges) typically fall between 13 and 15 cents per kWh on fixed-rate plans with 12-month terms. You may see energy-only rates as low as 7.6-8.9 cents per kWh, but remember to add 5-6 cents per kWh for TDU delivery when calculating your true cost. Plans advertising rates below 7 cents per kWh almost always have bill credits tied to specific usage thresholds — read the EFL carefully.

What happens when my contract expires?

Most REPs will send a renewal notice 30-60 days before your contract ends. If you do not act, you'll typically be rolled onto a variable-rate, month-to-month plan — almost always at a higher rate. Set a reminder to shop for a new plan 4-6 weeks before your contract expires.

Do I have to pay an early termination fee if I move?

It depends on the provider and plan. Some REPs waive the ETF if you're moving to an area where they do not offer service. Others require the fee regardless. Check your Terms of Service document (separate from the EFL) for the specific policy.

Are prepaid electricity plans a good deal?

Prepaid plans (pay-as-you-go) require no credit check and have no long-term contract, which makes them accessible. However, they typically cost 15-20% more per kWh than comparable postpaid plans. If you have the option, a traditional fixed-rate plan will almost always be cheaper.

Why is my Houston bill higher than someone in Dallas?

TDU delivery charges vary by service area. CenterPoint (Houston) charges more for delivery than Oncor (Dallas-Fort Worth). Since TDU charges make up 25-40% of your bill, this difference is significant. Houston also tends to have higher cooling demand due to humidity.

Saving Money on Texas Electricity: Your Action Plan

Here's a concrete plan you can execute this week to lower your electricity costs:

Today:

1. Log into your current provider's account and find your contract end date, current rate, and monthly usage history for the past 12 months.
2. Calculate your average monthly kWh consumption. Most Texas households use 1,000-1,200 kWh per month.

This week: 3. Go to Power to Choose and enter your zip code. Filter for fixed-rate plans with 12-month terms. 4. For your top 3-5 plans, download and read the EFL. Compare the price at the usage level closest to your average. 5. Check for minimum usage charges, bill credit thresholds, and base fees. Eliminate any plan with tricky structures that do not match your usage pattern. 6. Look at the early termination fee. Decide whether you're comfortable with the commitment. 7. Read a few reviews of the provider online, focusing on billing accuracy and customer service.

Before you sign up: 8. Calculate the total annual cost of your new plan versus your current plan. Multiply the difference by 12 to see your yearly savings. 9. If you're currently under contract, check your ETF. If the annual savings exceed the ETF, switching now may still make sense. 10. If your current contract does not expire for several months, set a calendar reminder to shop 4-6 weeks before expiration.

After you switch: 11. Monitor your first two bills carefully. Verify the rate matches what was in the EFL. 12. Consider installing a smart thermostat if you have not already — it's the single highest-impact efficiency upgrade for most Texas homes. 13. Set a calendar reminder for when your new contract expires so you never get rolled onto an expensive default plan.

The Texas electricity market rewards informed consumers and punishes passive ones. The difference between shopping smartly and simply accepting your current plan can easily be $500-1,000 per year. That is real money — and in a deregulated market, it's yours to claim.