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Fixed vs. variable-rate electricity plans in Texas:
your complete guide
Compare fixed- and variable-rate electricity plans in Texas with Reliant Energy.
Fixed vs. variable-rate electricity plans in Texas:
your complete guide
Compare fixed- and variable-rate electricity plans in Texas with Reliant Energy.
Shopping for electricity? It helps to have a basic understanding of the types of electricity plans so you can make the choice that best fits your home, your budget and all the ways you use energy. Let’s start by exploring the key differences between a fixed-rate and variable-rate electricity plan in Texas.
With a fixed-rate electricity plan, the price you pay for electricity remains locked in every month, except that the price may vary from the disclosed amount solely to reflect actual changes in transmission and distribution utility (TDU) charges, changes to the Electric Reliability Council of Texas (ERCOT) or Texas Regional Entity, Inc. administrative fees charged to loads or changes resulting from federal, state or local laws that impose new or modified fees or costs on a retail electricity provider (REP) that are beyond the REP’s control. Typically, no matter how much electricity you use, you’ll pay a predetermined rate for the energy itself. Your overall monthly bill also includes fees from your utility company, often called your transmission and distribution service provider (TDSP), as well as regional administration fees. These TDSP fees and administration charges can change due to factors beyond your retail electricity provider’s (REP’s) control.
| Feature | Fixed-rate plan | Variable-rate plan |
|---|---|---|
| Price stability | Locked-in rate per kWh for the entire contract term. Predictable monthly bills. | Rates can fluctuate monthly based on market conditions. Bills can swing widely. |
| Budgeting | Easier to plan expenses; ideal for households wanting consistency. | Harder to predict costs; requires flexibility in budgeting. |
| Protection from spikes | Insulated from sudden wholesale price increases (e.g., extreme weather). | Exposed to market volatility. |
| Potential savings | Miss out on lower rates if market prices drop. | Can benefit from market dips and seasonal lows. |
| Contract terms | Typically 12-36 months; early termination fees apply. | Month-to-month; no long-term commitment or cancellation fees. |
| Flexibility | Less flexible; switching plans mid-term may result in an early termination fee. | High flexibility; easy to change providers or plans. |
| Ideal for | Homeowners, families, or long-term renters who value stability. | Short-term renters or risk-tolerant consumers seeking potential savings. |
| Green energy options | Often available with fixed plans for predictable renewable energy costs. | Available, but pricing can vary more dramatically. |
Fixed-rate electricity plans offer stability and predictability in your monthly energy bills. By locking in an energy rate for the duration of your contract, you're shielded from the ups and downs of the energy market. It can be a smart choice for budget-conscious families or anyone who values peace of mind in their energy pricing.
Electricity demand and pricing in Texas are influenced by:
Choosing a fixed-rate plan means you’ll benefit from a locked-in energy rate. To ensure your price security, you’ll likely commit to a contract term with your provider, typically 12 to 36 months in duration. Many such contracts come with early cancellation fees. Be sure to consult your provider.
Often referred to as month-to-month plans, variable-rate electricity plans are typically short-term agreements with no traditional cancellation fees. Each month, the energy charge used to calculate your bill can fluctuate, sometimes by a defined percentage related to the previous month’s price.
Without a long-term contract, month-to-month plans can make it easy to switch electricity plans or providers. When electricity rates dip, variable-rate plans can also help customers save.
On the flip side, with the flexibility of variable-rate plans comes exposure to market volatility. Without a locked-in energy rate, your monthly bill could change significantly with the rise and fall of energy prices, making it harder to budget for energy. It's a trade-off between flexibility and predictability.
For most retail electricity customers in Texas, deciding between a fixed and variable rate is one of many factors that can impact their electricity plan choice. Why? One primary reason is the vast majority of Texas is a deregulated market.
In a regulated energy market, customers are may be provided a “one-size-fits-all” plan from their local utility company. This is the case in many states and regions across the country. In contrast, in the deregulated areas of Texas, homeowners, renters and businesses have more freedom in their choices.
REPs in a deregulated energy market compete for your business. To appeal to different needs, competing providers offer a wide range of electricity-plan structures, energy rates, plan lengths, time-of-use options, and even special plan enhancements.
So in Texas, along with making the basic choice between a fixed and variable rate, you’ll have plenty of options when it comes to pinpointing a plan that best meets your needs.
Choosing between a steady fixed-rate plan or a flexible month-to-month plan is a basic choice you’ll make when picking the electricity plan that fits you best. But the options and possibilities don’t stop there.
Prepaid electricity
Pay for your power in advance, with no need for a deposit or long-term contract.
Free electricity periods
These types of plans make it easy to save on the cost of electricity based on the time period electricity is being used. You’ll find plans with no charge on weekends or nights, or other variations.
Plans with bonuses
Look for plans with added-value perks like bill credits, gift cards, additional services, no-cost connected-home devices and even charitable contributions.
Seasonal demand can impact electricity rates. Largely because of increases in air conditioning and furnace use, demand in Texas typically peaks in the warmest parts of summer and coolest parts of winter. A locked-in, fixed-rate plan can help mitigate pricing changes during periods of seasonal demand spikes.
Many providers, including Reliant, offer plans that are powered by and support renewable energy generation sources like solar. You may also come across plans powered by wind energy.
In the case of solar plans there’s usually no need for rooftop panels or any other changes to your home’s electric system. You use power as normal, rain or shine, while you do your part to support a cleaner future. And since you won’t need to make any changes to your space, these types of electricity plans are ideal for both homeowners and renters.
Choosing a fixed-rate electricity plan typically requires you to enter into a contract with a provider. You’ll commonly see 12- to 36-month terms for these agreements. This is also why fixed-rate electricity plans are sometimes referred to as “term” plans.
When it comes to transferring or canceling service, different restrictions apply based on your contact.
In general, in deregulated Texas, when you move to a new address, you may be able to transfer your electricity service and not incur charges from your provider. However, you may be subject to a connection fee from the TDSP. Canceling a plan early may lead to a cancelation fee, based on your circumstances and the specifics of your contract with your provider.
Right now there are multiple ways to predict your energy bill. Your electricity provider likely offers an online bill simulator, or you can use a third-party calculator, and there are also ways to manually calculate your bill.
A simple example might use the following formula: Bill = (kWh usage × (energy rate + TDU delivery rate)) + base fee
Look at 12 months of usage to find your typical usage, both in an average month and during seasonal spikes (summer A/C and winter heating).
Multiply an average month's kWh usage by your current kWh rate to get a feel for a typical bill. Or choose a month during a seasonal spoke to get a feel for a higher-usage month.
Smart thermostats and home energy monitors track real-time consumption and can help predict monthly costs.
The TDSP, the company that delivers electricity through the physical grid to your location, charges a fee for doing so, which is itemized in your electricity bill each month.
These fees vary by region. Below are links to TDSPs in Texas.
If you’ve got questions about electricity plan choices, signing up and transferring or switching service, Reliant has answers. Explore our FAQs for these topics and plenty more.
Choosing the right electricity plan is about finding the balance that works for you—balancing your usage requirements, budget considerations and personal preferences. At Reliant, we're here to help you navigate these choices. Whether you're looking for stability, flexibility, or a way to support clean energy, we have a plan that fits.
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