Choosing an electricity
plan in Texas
Choosing an electricity
plan in Texas
Thanks to deregulation, most Texas residents can choose their electricity provider. Since providers are competing for your business, they have greater incentive to innovate, create new energy management tools and create more enticing offers to win you as a customer. However, a competitive energy marketplace also means customers need to do their homework before signing up for an electricity plan.
PowertoChoose.org, run by the Public Utility Commission of Texas (PUCT), is a great resource for comparing plans and providers. You can view electricity plans in your area and sort by price per kilowatt hour (kWh), contract length, plan benefits, and more.
10 questions to ask when shopping for electricity
Whether you’re moving to a new home or apartment or simply want a better deal, asking these 10 questions can help you find the right electricity plan.
1. What is my average monthly electricity usage?
Check past bills to gauge your average electricity usage per month. This will give you a better idea of what plans work for you. Be cautious; some plans are marketed with a low price or “teaser rates.” Often the only way to obtain that low price is by using a certain number of kilowatts every month.
2. How much is the price per kWh?
The price you pay per kWh depends on your usage. Electricity providers list prices at three different increments — 500 kWh, 1000 kWh and 2000 kWh per month. Once you have an idea of your monthly electricity usage (how many kWh you use), find a plan that offers a competitive price per kWh for that range.
3. Does this price include all costs and fees?
Your energy charge is not the only line item on your electricity bill. Many plans include additional recurring monthly charges, like TDSP fees from your utility company. Some plans even have minimum usage charges. Electricity providers are required to include these charges in the marketed price, but we strongly recommend closely reviewing your EFL to see what you are paying for.
4. Is the price per kWh fixed, variable or indexed?
Fixed-rate plans have contract terms ranging from three months and up. With a fixed-rate plan, you know what your energy charge will be for the length of your contract. The price can only change due to factors beyond your electricity provider's control, such as changes in fees from the utility company (TDSP) or regional administrative fees.
Variable price plans can only be a month-to-month contract. They have pricing that may vary according to a method determined by the retail electricity provider (REP).
The pricing on an indexed plan is driven by a pre-defined pricing formula based on publicly available indices or information, such as natural gas or time of usage, so it can be volatile.
5. Will a deposit be required?
A deposit may be required for new customers. Many companies require the deposit to be paid in full by the first bill due date, but some allow installment payments.
6. How long is my contract?
Confirm the contract length before signing up to avoid potential cancellation fees if you want to change plans or providers early. (Hint: many companies list the contract term in the plan name.)
7. Does the plan offer any incentives?
Electricity providers are constantly offering new plans to catch customers' attention, many of which come with gift cards, bill credits, and even smart home products to help you better manage your energy usage and budget.
8. What happens if I am late on a payment?
You may be assessed a penalty for making a late payment. Depending on how long your account is past due, you may also receive a disconnection notice. If you have trouble making payments on time or in full, check to see if your electricity provider offers automatic payments or if you qualify for a deferred payment plan.
9. Is there a fee if I cancel the contract?
Fixed-rate plans often include a cancellation fee, or early termination fee (EFT). Variable-price plans do not. Indexed plans can either be month to month or for a fixed term, so an EFT could apply. Cancellation fees are listed on the plan EFL, so be sure to reference that before signing up.
10. How is my power made?
Many Texas electricity companies offer both traditional electricity plans, as well as wind and solar plans that don’t require solar panels or a windmill.
All electricity plans have pros and cons. Do your research and consider a variety of factors when deciding the right electricity company and plan for you. Compare price, plan features, and customer benefits, as well as customer reviews and word of mouth when making your choice.
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