How to Shop for Electricity in Texas

When Texas deregulated its energy market in 2002, the state opened the floodgates for average people to choose how they wanted to purchase electricity. They didn’t have to simply accept the rates and terms as dictated by their local utility company any longer. They could explore electricity plans from a wide variety of companies.

In response to this advent of choice, retail electricity providers began creating plans tailor-made to appeal to every possible consumer – from prepaid, fixed-, and variable-rate plans, to free nights, free weekends, and renewably sourced power. The options seem nearly endless.

However, more than 15 years after market deregulation gave consumers the choice to pick the electricity plan that meets their needs, Texans still struggle with picking a plan that’s right for them. Moreover, with the state’s population booming, the energy demand has only increased, which means customers and stakeholders want cleaner energy options from wind, solar, and natural gas. Now, residents are not only having to decide which plan is best for them, but also which is best for the people, places and planet around them.

While it’s understandable you could become overwhelmed by plan choice, shopping for electricity in Texas is easier than you might think. We’ve collected five crucial tips for navigating the Texas energy landscape, so you choose the right plan for your budget, values, and lifestyle.

#1 Calculate your current energy consumption

Regardless of which plan you eventually choose, it’s important to know how much electricity you use. By knowing your average energy usage, you can easily calculate your estimated payment under each plan to determine which works best with your current situation.

#2 Pick the right plan for your lifestyle

You might have seen options like “indexed plans,” “real-time pricing,” “time-of-use plans,” and various combinations of free nights and weekends. As popular as those plans seem to be, two basic plan types remain: fixed-rate and variable-rate. Both have their pros and cons, so let’s break them down further:

• Fixed-rate plans: Customers who opt for a fixed-rate plan lock in an electricity rate for a specific contract term. If electricity rates go up, customers benefit from their having their rate locked in and end up paying lower-than-market prices. However, if electricity prices dip, these customers may end up paying more than the market price.

• Variable-rate plans: Customers who opt for a variable-rate plan will see their electricity rate change on a month-to-month basis. This rate is based on the market price of energy, which is determined from various factors, including consumer demand, generation costs, and even weather conditions. Many consumers enjoy the flexibility of such plans since they don’t have a contract, which means they can change plans whenever they want. That said, variable-rate customers often pay more during summer days when energy is at peak demand.
  

Ultimately, there’s no right or wrong answer to this question. Both have their benefits and drawbacks, but it’s up to you, the customer, to decide which is the right fit for you.

#3 Study the details

We recommend you peruse your plan options on PowertoChoose.org, the official site from the Texas Public Utility Commission. There, you can pop in your average electricity use, filter by the plan type (fixed, variable, indexed), and even see service records from customers.

A crucial part of comparing and contrasting plans on such a comparison site is examining the details of the benefits promised by the plans that interest you. You should also remember that plans often have more benefits and promotions than what’s visible on PowertoChoose.org. We encourage you to visit the actual website of the company offering the plan to see the full details of the offer.

That said, please remember this general rule of thumb: Anything claiming to be “free” isn’t really free. If your gut tells you deals like “free nights and weekends” sound too good to be true – they probably are. Instead of having these types benefits sway your decision, use that handy-dandy calculator in PowertoChoose.org with your average usage and consider the freebies as “bonus points.”

Lastly, consider the environmental impacts of your energy plan. Although you may not be directly affected, ask yourself: Was this electricity generated using coal, natural gas, wind, solar, or any other renewable material? The Texas Public Utility Commission states that, when you choose to buy plans powered renewable energy, you are helping increase the amount of renewable energy produced statewide.

#4 Narrow down your choices

At this point, you’ve more than likely seen way too many energy plans, and your eyes are starting to glaze over. That’s why we recommend narrowing down your choices to four or five plans and pick from a smaller pool. It’s important you don’t feel overwhelmed by all the bells and whistles of the plans so you make the right choice.

#5 If you don’t like your plan, change it

Unlike your significant other, you’re not married to an electricity plan – contract or no contract – and can change if you’re unsatisfied, or if you discover you’re locked into a steep rate.

Fortunately, for customers with variable rates, the plans are almost always month-to-month, which means you aren’t bound to a fixed-term contract or termination fees and can change providers at any time. On the other hand, most fixed-rate customers are locked in to a contract, but you can break it by paying a termination fee, especially if you feel the plan is that bad.

Whichever plan you choose, remember you have the power to decide how you buy electricity. Don’t get bogged down in the myriad of options. Rather, wrangle those retail providers like any true Texan would and get the best deal for your lifestyle.