The Beginner's Guide to Shopping for Electricity in Texas

How does the energy market work, and who keeps the power flowing?

The energy market has three key players you need to know:

• First, there’s us: energy suppliers, the ones sending energy to your home and making sure your lights stay on.
• Second, are the energy generators – think wind farms, solar panels, nuclear plants, and gas facilities. They generate the power.
• Third, the infrastructure managers, these are the behind-the-scenes crews handling pipes, pylons, cables, and balancing energy supply. They make sure there’s enough for everyone and sort out the nitty-gritty of powering homes.

As an energy supplier, we are the middlemen. We buy energy from the generators and deal with the complexities of coordinating with infrastructure managers and regulators. We’ve got your back, so you skip the industry headaches.

How do electricity companies calculate your energy bill?

Your energy bill is based on how much electricity you use, measured in kilowatt-hours (kWh). To calculate your total, your energy company multiplies your usage (in kWh) by the rate per kWh on your plan. The result reflects the cost of the electricity you used during your billing period.

Let’s break it down:

If you use 1,000 kWh of electricity and your rate is $0.10 per kWh, the math looks like this:

• Total Cost = Energy Consumption (kWh) × Rate
• Total Cost = 1,000 kWh × $0.10/kWh = $100

That’s your energy supply cost, but it’s not the whole bill.

Your total also includes Transmission and Distribution Utility (TDU) charges, which come from your local TDU (like Oncor or CenterPoint Energy). TDUs own and maintain the poles, wires, and equipment that deliver electricity to your home. These delivery fees are standard, regulated charges that stay the same no matter which energy provider you choose.

Want to dig deeper into how your bill reflects that usage? Read our post on how to read your energy bill.

Finally, taxes or small additional fees may apply depending on your location and plan type. Different providers and plan structures, like fixed-rate, tiered, or time-of-use plans, can also affect how your total cost is calculated.

What is an energy plan, and how do they work?

Electricity plans or energy plans are by far the most important part of determining your energy bills. It is an agreement between an energy provider and an energy consumer that spells out the rates, contract terms, duration, and any additional terms governing the supply of electricity to the consumer.

Here are the most common types of energy plans:

Fixed-Rate Plans:

These are like the rock stars of energy plans; everybody knows them. These plans have steady rates based on how much you use monthly. They aren’t doing the time-of-day tango; they size you up based on your total monthly energy use.

Fixed-rate energy plans are usually based on a 1000 kWh average. This sounds straightforward as long as your usage is around the 1000 kWh mark, meaning you’ll be scoring the lowest rate. The plot twist here is that if you are under or above the 1000 kWh mark, you’ll be charged a whole different rate. It’s like a monthly energy dance-off, and your bill is the judge.

Time-of-Use (TOU) Electricity Plans:

 Most often, you’ll see these as free nights or free weekend plans—and everyone loves the word "free." Picture this: from 11 pm to 7 am, your electricity is free, or all day Saturday and Sunday, your electricity bill takes a vacation. Sounds like a dream. Time-of-use plans can be great if you shift your energy use. Learn how to shift your energy usage with our guide.

But that’s not the whole story. The daytime or weekday rates throw a curveball into this sweetness and can potentially jack up your electricity bill. Outside of the specified time-of-use windows, your rates will be considerably higher.

Flex plans or Variable-Rate Plans:

The chameleons of energy plans. Flex plans roll with not one, but two rates depending on the time of day. During off-peak times (for example, 10 pm – 4 pm), you’re cruising at a low rate. But during peak times (like 4 pm to 10 pm), your rate could be substantially higher, somewhere between 20¢/kWh and 26¢/kWh.