Did you know that the average American home saw its electricity bill spike by four percent in February? Unfortunately, that’s not the end of price increases for electricity. Over the summer, some homes may see their bills increase by up to 45 percent.

Texas electricity rates aren’t excluded from this surge, and in part, the increase is coming from the cost of repairing grids to protect against natural disasters like the one that occurred in Texas last year. However, because Texas is a deregulated state, you have the power to choose when it comes to your electricity rate and provider.

Are you trying to find the best Texas electricity rates for your home? It’s vital that you understand the power to choose and the different factors that come into play.

Keep reading to learn how to make the right choice for your home.

Understanding the Power to Choose in Texas

Even with the rising cost of electricity, many Texans are in a place where they can choose the electrical company they use. This is great because it means you can shop around for competitively priced electric rates and plans.

You can do this because of energy deregulation.

What Is Energy Deregulation?

Energy deregulation removes regulations surrounding the energy market and changes how power gets delivered to you, the customer. Until the end of the 20th-century, energy was regulated in the United States.

Regulated energy, in effect, created a monopoly that was sanctioned by the government. The only provider of electricity and gas were utility companies controlled by the state.

There was no shopping around for an electricity plan; you had one choice if you wanted electricity. In 2002, Texas became a deregulated energy state.

This created the power to choose in deregulated areas. It’s important to note that there are still areas of Texas where you do not have those options.

What’s the Impact of Deregulated Energy?

Deregulated energy led to more power providers and lower prices. Because of deregulated energy, you can choose your energy company and save money on your electric bills by choosing the best rates plan for your household.

Choosing Your Energy Plans

The power to choose gives you options, but when you’re shopping around for energy rates, it’s essential to know what to look for. You want to compare the top local options in your area to find the best Texas electricity rates that meet the electric power needs of your household.

Tools like the Power to Choose website are great because they allow you to compare your options in one place. But, when you’re looking at the data, what do you need to know to make a good choice?

There are several things to do when you go to choose your energy plan.

Understand Your Electricity Needs

It’s important that you understand your electricity bill when you’re choosing an energy company. When you select your rate in Texas, the price is typically listed by kilowatt-hours or kWh. In 2020, the average annual electricity consumption for Americans was 10,715 kWh.

That averages out to around 893 kWh every month. What does that mean in terms of cost, though?

The average cost of electricity in Teas is 12 cents per kWh. This can add up quickly, and it’s important to choose an energy plan that meets your needs.

Plans in Texas are typically for 500 kWh, 1,000 kWh, or 2,000 kWh. Your energy rate gets determined by the plan you choose.

When you look at your electricity bill, you should be able to see your average monthly usage. This can help you determine what the best plan for your home is.

It’s also important to keep in mind that your energy usage is impacted by the seasons in Texas.

Texas Summer Electricity Rates

In July, temperatures in Texas can range from the low 90s to the low 100s. During those times, you’re more likely to use more energy as you crank the AC to escape the heat.

This can result in a higher kWh usage and ultimately a higher electricity bill. In addition, droughts and the weather can cause disruptions to the power supply.

Disruptions could get caused by low winds or low water levels, but whatever the reason, some energy suppliers will increase prices to help protect the energy network. It’s important to keep this in mind when you’re considering your electricity plan.

Texas Winter Electricity Rates

Winter in Texas comes with its own challenges. You will see your kWh increase when heating your home. Many Texas homes were hit hard during Winter Storm Uri, and it’s important to keep your winter heating needs in mind.

Understand the Basics

Along with understanding your household’s individual needs, you also need to understand the basics of Texas electricity rates. When you are comparing prices, there are a few things you need to look at. You can find this information under “Plan Details” when reviewing the Power to Choose website.

Plan Name

The plan name will be unique to the company you are looking at. Different plans will offer different benefits, so it’s important to note what each company offers.

Rate Type

There are several types of rates available in Texas. Some plans offer a fixed rate, while others offer a variable rate.

Contract Length

Different plans will have different contract rates. The rate contract will generally run anywhere from three months to 36 months.

There is typically a termination fee if you terminate before the end of your contract. Keep this in mind, and make sure you choose a plan where you can fulfill the contract length.

Renewable Energy Percentage

Renewable energy is just better for the planet. There’s no denying that.

When you’re looking at plan details, you can see how much of the energy powering your home is renewable.

Research Rate Plans

The best option for one person when it comes to electricity is not necessarily the best decision for someone else. Everyone’s energy needs are unique.

That’s why it’s important to do your research and understand what you’re signing up for. While comparing rates is a great place to start, you need to make sure to compare each aspect of a plan.

That’s why it’s also essential to understand things like a fixed rate versus a variable rate.

Do Not Forget to Read the Special Terms

When looking for your rate on the Power to Choose Website, you will see “Special Terms” under “Ordering Info.” DO NOT FORGET TO READ THEM.

This is paramount to not reading the small print on your contract. For example, some companies might require you to enroll in auto-pay. This will automatically deduct your payment from your bank account.

If you don’t want this option, the provider might allow you to pay using traditional methods. However, they also might increase your cost for not enrolling in auto-pay.

Other special terms to look out for include:
Paperless billing only
Plans only available to new customers
Additional flat fees per billing cycle
Plans not available in conjunction with other special offers or promotions
Limited-time fixed-rate (after the limited time, the plan switches to a variable rate)

You can also ask the provider you choose about special terms when you call to find out more sign up for services.

Understand Your Electricity Facts Label

The Electricity Facts Label or EFL gives the specifics of the plan you’re considering. The goal is to help you understand the cost, so you don’t incur unexpected fees on your electricity bill. This helps you make an informed decision.

Once you understand one EFL, it’s easy to decipher others because they come in a standardized format to prevent confusion. One of the most critical parts of the EFL is the top section.

Here you will see the electricity rate offered. You’ll also see details about other potential costs just below the electricity rate.

It’s important to understand each section and the information in it.

Average Price Per kWh

This section will show the 500, 1,000, and 2,000 kWh costs for residential customers. Typically, 500 kWh are recommended for smaller homes. Plans with 1,000 kWh are great for small or mid-sized houses, and 2,000 kWh is a good choice for a large home.

However, this is only a guideline. Ultimately, you want to base your decision on your home’s energy usage.

Base Charge

While your cost is dependent on the kWh your home uses, some companies have a base charge. This charge is incurred no matter how much electricity you use in a month.

Some base charges can exceed more than 100 dollars a month.

Energy Charge

The energy charge on your EFL will be the price you pay for electricity usage. This is the price your retail electric provider charges.

Transmission and Distribution Utility Charge

Transmission and distribution utility (TDU) charges also get called transmission or delivery charges (TDSP) fees. This cost isn’t determined by your provider.

Instead, it’s determined by the company that manages your power lines, checks your meter, and corrects outages. You will see the charge on your bill.

Contract or Termination Terms

Here you’ll find the length of your contract and the cost for early termination. Some companies charge a base fee for termination, while others determine the cost based on the number of months left on your plan.

When you’re signing up for a plan, make sure to take note of this.

Find the Right Type of Plan for You

We’ve mentioned fixed rate and variable rate plans; however, these aren’t the only options. Generally, one of the safest plans is a fixed-rate plan, but you should know the different options.

Fixed-Rate Plans

Fixed-rate plans are great for security, stability, and predictability. These plans offer a set contract term and rates that won’t change.

However, be sure that your special terms don’t specify that it’s only a fixed rate for a certain number of months. Fixed-rate plans are great when you’re choosing a longer contract.

They allow you to lock in the price for that number of months. However, many companies will offer short-term contracts with fixed-rate plans if you need something that’s more flexible.

Because of the stability of a fixed-rate plan, it tends to be one of the more popular choices.

Variable Rate Plans

Variable-rate plans also get referred to as month-to-month plans.

If you don’t want to be locked into a set contract or rate, a variable rate plan could be a better option. If you like playing the odds, this could be the right choice for you.

The cost of a variable rate plan fluctuates with the energy market. Your rates change every month. That means if energy prices drop, you will see a lower rate.

However, the other side is that you could see a higher cost if energy prices increase. With the current state of inflation and rising energy costs, this is a risky path to take. During Winter Storm Uri Texans with variable rates saw very high electricity prices.

But, if you need a transitional plan or freedom and flexibility when it comes to cancellation, this is an option you can look into.

Prepaid Plan

A prepaid plan for electricity is much like a prepaid cellphone. You pay for your electricity in advance and use it as you go. This allows you to pay only for what you use.

However, often the kWh cost is more expensive than other plans. The benefit is that you can find plans that don’t require credit checks, and many times your power can get turned on the same day.

Time of Use

Time of Use or (TOU) is great if you know how and when you use electricity. This type of plan gives you a set price and offers free or reduced-cost electricity during predetermined times.

For example, you might have a higher charge from six pm to eight pm, but see that cost drop after eight.

Renewable Plans

Renewable plans can help offset your electricity use with renewable energy credits. These credits come from the electricity that gets generated using renewable sources. For example, geothermal, wind, or solar.

Solar Plans

If you have solar panels, you could be in luck. When your solar panels produce excess electricity that your home doesn’t use, it can get pushed back into the grid.

This gives you credits on your electricity bill. Net metering is a great way to reduce your bill.

Average Billing

If you use a lot of electricity in the summer with your air conditioning, but your electricity usage decreases in the winter due to using natural gas for heating, this could be a wise choice for you. With this type of plan, your energy company takes a year of your energy usage and divides it by twelve.

This helps spread out the cost of your electricity versus having months where your bill feels astronomical.

Indexed Plans

Indexed plans are the most complicated to understand. You shouldn’t choose an indexed plan unless you have a significant amount of knowledge about energy in Texas.

These plans can experience price fluctuations, and there is a formula used to calculate your price.

Let’s Talk Renewable Energy

The Power to choose is an excellent option for Texas electricity rates. However, because you have the power to choose, you also have the responsibility to choose wisely.

Texas uses more electricity than any other state. This is due to the size, weather, and population.

While various providers may offer a small percentage of renewable energy, other providers offer 100 percent renewable energy. Choosing a company that helps you power your home using green energy can reduce your carbon footprint.

Traditional companies that use fossil fuels have too many negative effects on the environment. But, green energy harnesses the wind, sun, and water to create electricity and has less of a negative impact.

Because these resources are nearly infinite, this energy source is renewable. There are many benefits to using a company that provides renewable energy.

Reliability

If you’re looking for a more reliable and resilient energy source, renewable energy is an excellent choice. These systems are less likely to experience large-scale failure. This is because the energy sources are distributed and modular.

This means that during severe weather, one piece of equipment going down won’t halt service to the entire area.

Job Creation

Interest in alternative energy is growing quickly. This quick growth has increased the jobs available. Even with the impact of Covid, this field saw growth.

Improve Public Health

Burning fossil fuels cause air pollution. When you consider the impact, globally, the pollution caused by fossil fuels is responsible for one in five deaths.

Health issues that fossil fuels can cause include:

Heart disease
Asthma
Cancer
Premature death

In addition, fossil fuels contribute to water pollution. However, using renewable energy sources can help to reduce emissions and improve the quality of our air and water.

Ultimately, reducing pollution caused by fossil fuels can help improve public health and reduce healthcare costs.

Energy Independence

Historically, petroleum has been the most significant energy source in the United States. We use it to heat buildings, produce electricity, and propel our vehicles. This has led to a reliance on foreign sources for petroleum.

In 2021, the United States imported around 8.47 million barrels per day from 73 different countries. Because renewable energy sources don’t need to be imported, they can help reduce the dependence this need creates.

Considering recent events, this is becoming more and more important. Russia is one of the bigger providers of petroleum for the United States.

The war and subsequent decisions to not work with Russia have been a factor in the rising cost of gas and electricity.

Abundant Supply

Fossil fuels are a finite resource. There is only so much available. However, resources like the sun, wind, and water are almost infinite.

Alternative energy sources have the potential to supply the entire country’s energy needs with some left over.

Stable Energy Costs

Creating the sources needed for alternative energy does come with a high price tag. However, after the initial cost keeping it operating is inexpensive.

You don’t have to purchase fuel to keep renewable energy sources running, and this can lower the cost of electricity.

However, the benefits to cost don’t stop there. The cost of electricity is susceptible to fluctuations based on the price of fuels. This is similar to natural gas or coal.

However, with alternative energy sources, you don’t experience that fluctuation. Because of that, it’s possible that the cost to use renewable energy will be more stable over long periods.

Ask Yourself the Right Questions

Choosing the right plan for your home can feel overwhelming. However, ultimately there are a few important questions you can use as a guideline.

What Are the Costs?

Make sure you consider the kWh cost, base charge, and TDSP fees. All of these will factor into your monthly bill, and you want to make sure you are getting the best price for your household.

What Are the Payment Options?

Do you have different payment options? Can you pay online? Or do you need to mail in your payment?

For some choosing a company that automatically deducts your bill is a great choice. However, others might not want that, so be sure the company meets your needs there.

Is There a Deposit?

You need to know if there’s an initial deposit. If you can’t afford it, then you might want to go with another company.

What About the Contract?

Before you sign on the dotted line, make sure you know your contract length. In addition, ensure that you’re prepared to pay any fees if you break the contract or cancel your plan early.

Find the Right Texas Electricity Rates for Your Household

The power to choose gives you many choices regarding Texas electricity rates. However, you must choose wisely.

Companies that provide reasonable fixed rates and renewable energy are ones you want to look closely at. Are you ready to find the right plan for your home?

Chariot Energy has some of the most competitive rates in Texas, and we offer 100 percent renewable energy. Find your plan today and lock in a fixed rate that works for you.

Power to Choose Texas: A Guide for Texas Electricity Rates