Who Has the Cheapest Electricity Rates in Texas?

Thanks to the deregulated energy market in Texas, Texans have the freedom to choose and switch between energy providers. While this is a boon to any household, not all Texans choose a provider with the best rates. This article lists providers with the least rates while providing tips on how to choose them.

What is The Average Electricity Rates in Texas?

The average electricity rate in Texas in 2024 is 15.02/kWh according to the Energy Information Administration (EIA). This is 11% lower than the national average of 16.88/kWh. The Energy Reliability Council of Texas (ERCOT) predicts that the grid will be stable and have sufficient capacity to meet the demand in spring.

Comparing Rates in Texas

Difference Between Energy Suppliers and Utility Providers

In Texas energy suppliers or electric providers have different roles to that of utility providers. Texans can choose their electricity provider, responsible for selling electricity to them. And thanks to deregulation, there’s stiff competition among electricity providers, allowing you to choose one that meets your budget and energy needs.

Utility providers, on the other hand, are responsible for transmitting electricity, maintaining the infrastructure, and restoring power in case of a blackout. Like other states, your address determines your utility provider and you cannot change it. 

Some of the main utility providers include Texas-New Mexico Power, Oncor Electric Delivery, and AEP Texas Central.

Types of Energy Plans in Texas

So, which plans can you find in Texas? Let’s find out.

• Fixed-rate: As the name suggests, the electricity rates remain constant throughout the plan length. This is an ideal option if you want a predictable monthly bill.
• Variable-rate: The plan is more flexible than the fixed-rate. However, the rates change depending on the market conditions. You’ll get high rates during peak hours and low rates during off-peak hours.
• Prepaid and no-deposit plans: Most electricity providers will require you to pay some deposit if you don’t meet their criteria. Prepaid and no-deposit plans allow you to skip the deposit and pay upfront for your electricity.
• Renewable energy plans: All electricity providers offer a certain percentage of renewable plans. Some even offer 100% clean energy plans.
• Commercial energy plans: Commercial customers can enjoy competitive plans with low rates to power their businesses. Some electricity providers also offer green energy options for businesses. 

Average Electric Bill in Texas

Texans pay a monthly electric bill of $176.94 per month. By multiplying the average monthly usage of 1,178 kWh by the average electric rate of 15.02/kWh, you get the above electric bill. As you’d expect, the average electric bill is higher than the national $151.75 average monthly bill. 

Your usage, however, depends on your home and the appliances you use daily. The season also affects how much you’ll pay for your electricity. Generally, Texans pay higher during summer months than in winter. 

As such, the most practical way to determine your average electricity usage is to look at your past monthly electric bills. Alternatively, you can look at the electricity consumption labels of your appliances to calculate the average power usage. 

Deregulation in Texas

Unlike other states, Texas has a deregulated energy market, allowing customers to choose their electricity provider. This approach provides a competitive ground for providers, which is beneficial to customers as the prices can reduce dramatically. 

Most providers use the term “power to choose” indicating that customers have the freedom to choose and switch between providers. The best part is that some energy providers do not penalize you for switching to a different provider before the plan is complete. 

Keys to Consider When Choosing an Electric Provider

Here are a few factors to consider when shopping for electricity.

• Price: This is arguably the chief factor to consider when choosing your energy provider. You want to choose one that meets your budget and doesn’t have volatile electric rates. Consider the provider’s flat fee and the per-kWh cost since you’ll get the same from the TDU.
• Term: Another factor to consider is your preferred term. Do you want a fixed? Variable? Or a renewable energy plan? Fixed plans range from three to 36 months with a three-month being cheaper since the rates change every three months. A 36-month plan is ideal if you want predictable monthly electricity bills.
• Reputation: Providers differ in their service delivery and reliability. Most cheap options are not always the best fit as they can have hidden charges. Read reviews on their websites and social media platforms to get a feel of their customer service.
• Green incentives: Some providers offer discounts or incentives if you are using smart devices at home. If you have a solar system such as the BLUETTI AC200MAX + 2*B230 + 3*PV200 | Solar Generator Kit, they can offer net metering allowing you to sell excess energy to the grid.

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• Cancellation fees: While variable plans don’t have cancellation fees, most fixed plans come with cancellation fees ranging from $50 to $395. They come in handy when you want to switch to another provider before the contract expires.

Besides the above factors, there are several hidden things you need to watch out for. First, keep in mind that the average price is not what you’ll be paying for. There are other charges that are hidden in plain sight. Make sure to go through the plan details to have a clue of what you’ll be paying for.

Secondly, compare identical energy providers so you can get value for your money. Think of term length, average price, and contract type. This will help you make a better decision. 

Also, check whether the energy provider requires a deposit if you don’t meet their requirements. While some offer no-deposit plans, their rates might be higher. Most deposits are two months of billing. 

How To Switch Between Energy Providers 

Luckily, you can switch between energy providers with ease. However, you need to consider the cancellation fee and money to pay for a new plan. First, check your electricity facts sheet to determine what you want different. Are you looking for lower rates or a plan without time-of-use? Also, consider if your current provider charges cancellation fees.

Once you determine what you want to change, compare identical companies in your area. Look at their reputation. What are current and former customers saying? Consider their terms, average price, and if they have green discounts. 

With a few ideal options, check on their requirements. Do they offer no-deposit plans? And if they don't, what are their credit score requirements? If this seems daunting, you can always consult a qualified electrician to help you make the right decision.

Switching is as simple as starting a plan with the new provider. Luckily, the new provider will notify your old provider of the switch. The old company will send you the final bill after the switch.

What is The Best Way to Save Energy in Texas?

The most practical way to save energy in Texas and avoid paying high electric bills is to install a solar system. Better yet, batteries paired to your solar panels. Having home battery backup allows you to use stored solar energy during peak hours. 

For example, installing the AC300+B300 | Home Battery Backup with robust solar panels can lower your bills significantly. But that’s not all, it qualifies you for the 30% federal tax credit. And since it has a high 3072Wh capacity expandable to 12288Wh, you’ll use it for hours on a single charge. 

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The BLUETTI AC500 + B300/B300S | Home Battery Backup is also another impressive option that comes with a 3072Wh capacity. And thanks to the modular design you can add an expansion battery, increasing its capacity to 18432Wh. 

Final Thoughts

There are many energy providers to choose from in Texas, each offering varying rates and terms. Consider comparing those within your area to avoid paying exorbitant electric bills. And if you want to lower your energy costs, install a solar system coupled with an energy storage system.