How To Shop For Electricity In Texas: Shopping Guide for 2024

How To Shop For Electricity In Texas: Shopping Guide for 2024

Shopping for electricity in Texas doesn't have to be complicated. Here are a few simple things you should know to ensure you get the best deal.
Written By:
Anna Grisham
min read
Last Edited By:
Kendra Aquino
May 30, 2024

Navigating the Texas electricity market can seem overwhelming. Texas electricity rates keep going up. There's a seemingly never-ending list of retail electricity providers with hundreds of plans with complicated terms. Enrolling in the wrong plan could cause sky-high electric bills and a pricey early termination fee.

This comprehensive guide will help you understand how to shop for an electricity plan in Texas, what to consider, the types of plans available, and more.

How to Shop for an Electricity Plan in Texas

Step 1: Understand Your Usage

Before you switch electricity providers, understand your electricity usage. Electricity plans are designed for different levels of energy usage. If you check the electricity facts label for an energy plan you will likely see different rates for 3 different levels of usage.

You will want to find a plan that best fits your usage habits. You can look at past bills to determine your average monthly consumption, or if you want to speed up the process, we can connect with your utility to get your past energy usage and match you with the best energy providers that fit your needs.

Step 2: Compare Providers

There are dozens of energy providers in Texas. While you might be familiar with big names like TXU and Reliant, there are other smaller electric providers that are just as good and can help you save money.

Look at the rates, contract terms, and customer reviews. Since we can fetch your energy usage you are able to shop with full bill estimates. You'll be able to see your future energy costs and find the cheapest electricity rates for your home.

Remember, Texas electricity rates are always fluctuating. The energy provider you shopped yesterday may not be the best deal today.

Step 3: Read the Fine Print

Always read the terms and conditions carefully. Pay attention to the length of the contract, early termination fees, and any additional charges.

The electricity facts label is a great tool to help you understand the true cost of an energy plan. Make sure you understand it before enrolling.

Avoid Teaser Rates, Time of Use Plans, and Bill Credit Plans

Electric companies have started using several gimmicks and tricks meant to push consumers into plans that are not in their best interest. They may seem great at first glance, but in reality, you end up paying much more than the average Texas electricity rate.

Here are some of the most common tricks we see.

Teaser Rates

Some providers will offer low rates on short-term plans, like 3 or 6 months. Then once your contract renews they raise the rate. Did your electricity service change? Nope! The provider just used the initial lower price to get you in the door knowing that you probably wouldn't notice the increase until you were already locked into a plan.

Now you are left with a higher-than-average electricity rate, or forced to pay an early termination fee. We always recommend adding a reminder to your calendar when you sign up for a new plan to check rates before renewing (If you use GridHacker, we'll send you an email reminder as well). These 30 seconds could help you save money in the future.

Time of Use Plans

Energy plans that advertise "free nights" or "free weekends" are called time-of-use plans. While there are certain people that can benefit from time-of-use plans, they are not a good deal for most people.

Time-of-use plans have extremely high electric rates during non-free hours and then discounted or free rates during specific times. But, unless you monitor your usage habits extremely closely, you will end up paying way more than the national average for electricity.

We have a full write-up on these types of plans here: Free Nights and Weekends Electricity: What You Need to Know

Bill Credit Plans

Bill credit plans are electricity plans that reward customers with bill credits when their electricity usage falls within a specific range. These credits are applied to your bill, effectively reducing your monthly cost. The goal is to incentivize customers to manage their electricity usage efficiently.

The downside is that the rate these plans advertise assumes you are going to meet the requirements to receive the bill credit.

Here is an example from Gexa Energy:

This plan is advertised as 11.9¢ per kWh. But if you look at the section called "Energy Charge" you will see 18.7¢. That's because they are advertising this plan as if the user has the perfect usage (1,000 kWh) to meet the bill credit requirements.

However, if you had used 2,200 kWh during a warm summer month, your bill would be close to $400 and the rate you actually paid is significantly higher.

The main takeaway: AVOID BILL CREDIT PLANS.

What to Consider When Shopping the Texas Electricity Market

  1. Rates: Electricity rates can vary significantly between providers and electricity plans. Look for competitive rates but also consider the overall value.
  2. Contract Length: Decide if you prefer a short-term or long-term contract. Short-term contracts offer flexibility, while long-term contracts can provide rate stability.
  3. Renewable Energy Options: If sustainability is important to you, look for providers offering renewable energy plans. These plans support sources like wind and solar power.
  4. Plan Types: Understand the different types of plans available (fixed-rate, variable-rate, and prepaid) to choose the one that best suits your lifestyle and budget.
  5. Fees and Charges: Be aware of any additional fees such as early termination fees, connection fees, and minimum usage fees.
  6. Customer Service: Reliable customer service is crucial. Check reviews and ratings to ensure the provider offers good support.

Types of Electricity Plans in Texas

  1. Fixed-Rate Plans: These plans offer a stable rate for the duration of the contract. They provide predictability in your monthly bills and protection against market fluctuations.
  2. Variable-Rate Plans: The rate for these plans can change based on market conditions. They might offer lower initial rates but come with the risk of higher prices if market rates increase.
  3. Prepaid Plans: Pay for your electricity upfront with no long-term contracts or credit checks. This can be a good option if you want to avoid deposits and manage your budget closely.
  4. Green Energy Plans: These plans are powered by renewable energy sources. They might be slightly more expensive but are ideal for environmentally conscious consumers.

Texas Electricity Providers

Texas has a variety of electricity providers, each offering different plans and services. Some of the well-known providers include:

You can browse ratings and rates for all energy providers in Texas here.

Moving to Texas? Here's How to Set Up Electricity in Your New Home

  1. Start Early: Begin your search for an electricity provider as soon as you know your move-in date. This ensures you have power when you arrive.
  2. Compare Plans: Use comparison tools to find the best plan for your new home. Consider the size of your new home and your expected electricity usage.
  3. Contact the Provider: Once you’ve selected a plan, contact the provider to schedule your service start date. Be prepared with your move-in date and any necessary identification.
  4. Set Up Auto-Pay and Alerts: Consider setting up auto-pay and usage alerts to manage your bills and avoid late fees.

Texas Electricity Deregulation

Texas deregulated its electricity market in 2002, allowing consumers to choose their electricity provider. This competition has led to more options and potentially lower prices for consumers. Here's what you need to know about deregulation:

  1. Choice: You have the power to choose from a variety of electricity providers and plans.
  2. Competition: Providers compete for your business, which can lead to better rates and services.
  3. Variety: Deregulation has resulted in a wide range of plan options, including green energy and prepaid plans.

Shopping for electricity in Texas doesn’t have to be complicated. By understanding your options and what to look for, you can find the best plan to meet your needs and budget.

Frequently Asked Questions About Shopping for Electricity in Texas

How do I know which electricity plan is right for me?

Consider your usage habits, budget, and preference for contract length. Use comparison tools like GridHacker to evaluate different plans.

Can I switch providers if I'm unhappy with my current plan?

Yes, you can switch providers at any time, but be aware of any early termination fees that may apply.

Are there any hidden fees I should be aware of?

Read the terms and conditions carefully to understand all potential fees, including connection fees, base charges, minimum usage fees, and early termination fees.

How can I ensure I'm getting a good rate?

Electricity prices are constantly changing. The best thing you can do is watch the market in the months leading up to when you need to renew. This way you can gauge your options and get the best deal.

What if I want to use renewable energy?

Many providers offer green energy plans. You can see the exact amount of energy that will come from renewable sources in the EFL.