Texas Electricity Guide : Compare Plans, Understand Bills & Lower Costs
Last Updated: October 2025
Your complete resource for understanding how the Texas electricity market works, finding the best energy plan for your home, and saving money on your electricity bills.
Table of Contents
- Why Texas Electricity is Different
- How the Texas Electricity Market Works
- Understanding Your Electric Bill
- How to Shop for Electricity in Texas
- Time-of-Use and Smart Energy Plans
- Solar and Buyback Programs in Texas
- Why Your Bill Changes with the Seasons
- Your Rights and Protections as a Texas Consumer
- Frequently Asked Questions
Why Texas Electricity is Different
Texas operates a deregulated electricity market, meaning you can choose from over 100 electricity providers across the state. Unlike most Americans who are stuck with one utility company, Texans in deregulated areas (covering about 85% of the state) can shop for plans based on price, contract length, renewable energy percentage, and customer service ratings.
This competition has created significant opportunities for savings. Households that actively compare electricity plans can save $200-$ 400 per year compared to those who stick with default rates. However, navigating ERCOT, TDUs, EFLs, and dozens of plan options can feel overwhelming if you don't know what to look for.
At Octopus Energy, we believe electricity should be simple, transparent, and easy to manage. This guide breaks down everything you need to know about how electricity works in Texas, how to compare plans effectively, and how to take control of your energy costs.
Ready to compare plans now? Get your personalized quote.
In a hurry? Start here:
New to Texas electricity? Start with How the Texas Market Works
Shopping for a plan right now? Jump to How to Shop for Electricity
Bill higher than expected? See Why Bills Change with Seasons
Have solar or considering it? Check out Solar Buyback Programs
Want to save with smart devices or EV? Explore Time-of-Use Plans
Need to know your rights? Read Consumer Rights & Protections
How the Texas Electricity Market Works
The Three Parts of Texas Electricity
The Texas electricity system has three distinct players, and understanding each one helps you make smarter decisions:
1. ERCOT (Electric Reliability Council of Texas)
ERCOT manages the power grid for about 90% of Texas. They don't generate or sell electricity, they act as the traffic controller, making sure supply meets demand 24/7. When you hear about "grid alerts" during heat waves or winter storms, that's ERCOT managing the balance between power generation and usage across the state.
2. Transmission and Distribution Utilities (TDUs)
Your TDU (like Oncor, CenterPoint, AEP Texas, or TNMP) owns and maintains the physical infrastructure — the power lines, poles, and meters. You can't choose your TDU; it's determined by your location. TDU charges appear as delivery fees on your bill and are regulated by the state, so they're the same regardless of which retail provider you choose.
3. Retail Electricity Providers (REPs)
This is where you have a choice. REPs like Octopus Energy buy wholesale electricity and sell it to consumers with various plan structures. You can compare REPs based on price, contract terms, renewable energy options, customer service, and plan features like time-of-use rates or smart home integrations.
Deregulated vs. Regulated Areas
Most major Texas cities (Houston, Dallas, Fort Worth, Austin, and San Antonio) are in deregulated areas where you can choose your provider. Some areas, including parts of the Panhandle, East Texas, and rural communities, remain regulated with one utility company serving all customers.
In Short, Texas electricity has three parts: ERCOT manages the grid, TDUs deliver power to your home, and REPs (retail providers) are who you choose and pay. You can only choose your REP; the rest is based on location.
Learn more:
- Read our detailed breakdown: How the Texas Energy Grid Works
- Understand pricing transparency: Why Don't Texans Deserve Energy Price Transparency?
Understanding Your Electric Bill
Breaking Down the Charges
Texas electricity bills have several components, and knowing what each one means helps you identify where you can save:
Energy Charge (Supply Rate): This is what you pay your retail electricity provider for the actual electricity you use, measured in kilowatt-hours (kWh). This rate is set by your contract and is where competition happens. Supply rates can range depending on your plan, usage level, and market conditions.
TDU Delivery Charges: These regulated fees cover the cost of delivering electricity to your home through power lines and infrastructure. TDU charges are the same regardless of which REP you choose.
Base Charges and Fees: Many plans include a monthly base charge regardless of how much electricity you use. Some plans also have minimum usage fees or other charges that will be detailed in the Electricity Facts Label (EFL).
Key Points: Your bill has two main parts. The energy charge (what your REP charges for electricity) and TDU delivery charges (regulated fees for infrastructure). Always look at the total cost, not just the advertised energy rate.
Learn more:
How to Shop for Electricity in Texas
5 steps to find the best energy plan for you
Step 1: Check your usage history
Look at your past 6 - 12 months of electricity bills to understand your average monthly usage. Many plans are priced based on usage tiers; a plan that looks cheap at 1,000 kWh might be expensive at 1,500 kWh.
Step 2: Understand plan types
- Fixed-Rate Plans: Your rate stays the same for the contract term (6-36 months). Best for budget predictability and protection from price spikes.
- Variable-Rate Plans: Rates fluctuate monthly based on market conditions. These plans are flexible, but can be risky during high-demand periods.
- Time-of-Use Plans: Lower rates during off-peak hours (typically nights and weekends). Great if you can shift usage or have an EV.
- Prepaid Plans: Pay before you use. No credit check or deposit required, but requires active management.
Step 3: Read the Electricity Facts Label (EFL) Every plan must have an EFL showing the price at 500, 1,000, and 2,000 kWh usage levels. Don't just look at the advertised rate. Check the rate that matches YOUR typical usage.
Step 4: Watch out for common traps
- Teaser rates: Plans advertising extremely low rates that only apply at specific usage levels.
- Bill credits: Plans that require you to hit exact usage windows to get advertised rates.
- Early termination fees: Can range from $150-300 if you cancel before the contract ends.
- Auto-renewal terms: Some plans automatically renew at higher rates.
Step 5: Consider customer service and features
Look for providers with responsive customer support, easy-to-use apps, paperless billing options, and transparent pricing. Read reviews and check complaint ratios with the Public Utility Commission of Texas.
Did you know that Octopus Energy has over 4.5 stars on TrustPilot? Take a peek and see why thousands of Texans have switched.
Best Practices for Comparing Plans
- Compare the average price per kWh at your usage level, not the advertised headline rate
- Calculate total monthly costs, including base fees and TDU charges
- Consider contract length, longer isn't always better if rates are falling
- Look for plans with no cancellation fees if you're uncertain about moving
- Check if renewable energy is important to you (many providers offer 100% renewable plans)
Recap: Find your average monthly usage, read the EFL at YOUR usage level (not the advertised rate), avoid plans with bill credits or exact usage requirements, and watch out for early termination fees.
Learn more:
Ready to compare plans now? Get your personalized quote today.
Time-of-Use and Smart Energy Plans
How Time-of-Use Electricity Plans Work
Time-of-use (TOU) electricity plans charge different rates depending on when you use power. In Texas, electricity demand peaks on summer afternoons (2-7 PM) when air conditioners across the state are running full blast. TOU plans incentivize you to shift usage away from these expensive peak hours.
Typical TOU Rate Structure:
- Peak hours (2-7 PM weekdays): 20-30¢ per kWh
- Off-peak hours (nights and weekends): 6-10¢ per kWh
- Super off-peak (late night): Sometimes as low as 3-5¢ per kWh
Who Benefits from TOU Plans?
TOU plans work best if you can:
- Shift major energy use to evenings and weekends (laundry, dishwasher, pool pumps)
- Charge an electric vehicle overnight
- Precool your home before peak hours start
- Use smart home devices or programmable thermostats to automate shifting
Households could save up to 20-40% on electricity costs with TOU plans if they actively manage their usage patterns.
Smart Energy Tools and Automation
Modern technology makes time-of-use plans easier than ever:
- Smart thermostats can precool your home and reduce AC during peak hours
- EV charging schedulers automatically charge your car during the cheapest hours
- Smart plugs can delay running appliances until rates drop
- Energy monitoring apps show real-time usage and help identify opportunities to shift
Learn more:
Solar and Buyback Programs in Texas
Solar Power in Texas
Texas leads the nation in solar energy potential thanks to abundant sunshine and favorable economics. Residential solar installations have grown dramatically, with costs dropping to $2.50-3.50 per watt installed. A typical 6-8 kW system costs $15,000-24,000 before incentives.
Federal and State Incentives
- Federal Solar Tax Credit (ITC): 30% of installation costs (through 2032)
- Property tax exemptions: Solar installations don't increase your property taxes in Texas
- Local utility rebates: Some areas offer additional rebates (check your specific utility)
Solar Buyback Plans
Once you have solar panels, you can earn credit for excess electricity you send back to the grid through buyback plans (similar to net metering):
How Solar Buyback Works:
- During sunny hours, your panels generate more electricity than you use.
- Excess power flows back to the grid through your meter.
- Your retail electricity provider credits you for that power.
- You use those credits to offset the power you pull from the grid at night or on cloudy days.
Buyback Rates in Texas: Buyback rates vary by provider and plan. Some providers offer a 1:1 buyback (crediting you the same rate you pay), while others offer wholesale rates.
Maximizing Solar Savings
- Pair solar with time-of-use plans to buy cheap off-peak power and sell during expensive peak hours
- Size your system based on your actual usage (not bigger)
- Consider battery storage to use your solar power at night (though batteries are still expensive)
- Shop for REPs with competitive buyback rates as they can vary significantly
Learn more:
Why Your Bill Changes with the Seasons
Understanding Seasonal Usage Patterns
Texas electricity bills can swing dramatically between seasons, sometimes doubling or tripling from winter to summer. Understanding why this happens helps you budget and find ways to manage costs.
Summer (June-September): Air conditioning is the biggest electricity consumer in Texas homes, accounting for 50-70% of summer usage. When temperatures hit 95-105°F, ACs run almost constantly. Making the average household usage jump in the hottest Summer months, July and August.
Winter (December-February): Heating is less energy-intensive than cooling in most of Texas (many homes use natural gas heat), but cold snaps can still spike usage. Electric heating, space heaters, and heat pumps increase consumption.
Spring and Fall: Mild weather means minimal heating or cooling, resulting in the lowest bills of the year. These are the "baseline" months that show your home's energy use for lighting, appliances, and electronics without climate control demands.
Tips to Manage Seasonal Bill Spikes
- Set thermostat strategically: Every degree above 72°F in summer saves 6-8% on cooling costs
- Use fans to supplement AC: Ceiling fans make rooms feel 4-6°F cooler
- Maintain your HVAC system: Clean filters and annual tune-ups improve efficiency by 15-20%
- Seal air leaks: Weatherstripping and caulking prevent conditioned air from escaping
- Use programmable thermostats: Automatically adjust temperatures when you're away or sleeping
- Close blinds during peak heat: Blocking direct sunlight reduces cooling needs
Learn more:
Your Rights and Protections as a Texas Consumer
Your Rights When Choosing Electricity
The Public Utility Commission of Texas (PUCT) regulates retail electricity providers and protects consumer rights:
Right to Transparent Pricing: Every provider must publish standardized Electricity Facts Labels showing exact pricing at different usage levels.
Right to Switch Providers: You can change providers anytime, though you may owe early termination fees if you're under contract. Your new provider handles the switch — you never lose power during the transition.
Right to Accurate Billing: Bills must clearly show energy charges, TDU charges, and any fees. You have the right to dispute charges.
Right to Privacy: Your energy usage data is protected. Providers can't share your information without consent.
Right to Service: If your provider goes out of business or you don't pay, you're automatically transferred to a Provider of Last Resort (POLR) you won't be left without power.
Understanding Your Contract
Before signing up:
- Read the full Terms of Service, not just the EFL
- Note the contract length and auto-renewal terms
- Understand early termination fees
- Check if rates can change (even "fixed" plans can change under certain conditions)
- Know the process for disputing charges or filing complaints
Filing Complaints
If you have issues with your provider:
- Contact your REP's customer service first
- If unresolved, file a complaint with the PUCT: (512) 936-7120 or www.puc.texas.gov
- Check your provider's complaint ratio on PowerToChoose.org
Learn more:
Ready to Take Control of Your Energy?
Octopus Energy makes it easy to choose fair, affordable electricity with transparent pricing and ridiculously good customer service. No hidden fees, no confusing terms. Just honest energy that works for Texans.
Why Texans Choose Octopus Energy:
- Transparent pricing: No tricks, no frills, just clear rates
- Award-winning customer service: Real people who actually help
- Smart energy features: Tools to help you save money
- 100% renewable options: Clean energy with transparent prices
- Easy switching: We handle everything, and you stay powered
Ready to compare plans now? Get your personalized quote today.
Frequently Asked Questions
How long does it take to switch electricity providers in Texas?
The switch typically takes 1-2 business days once you've enrolled in a new plan. Your current provider is notified, and on your switch date (called the "meter read date"), your new provider takes over. You'll never experience a power outage during the switch.
Do I need to cancel my old plan before switching?
No. Your new provider handles the cancellation process automatically. However, check if you'll owe early termination fees to your current provider if you're still under contract.
Can I switch plans anytime?
Yes, you can switch whenever you want, but you may face early termination fees (typically $150-300) if you leave before your contract ends. These fees should be listed in your Electricity Facts Label and Terms of Service.
What happens if I move to a new address in Texas?
You can either transfer your existing plan to your new address (if your provider serves that area) or choose a new plan. Moving typically allows you to cancel without early termination fees. Check your contract's "move-out" provisions.
How do I know if I'm in a deregulated area?
Check Power To Choose and enter your ZIP code. If you see multiple providers, you're in a deregulated area. Major cities (Houston, Dallas, Fort Worth, Austin, most of San Antonio) are deregulated.
What's the difference between my REP and my TDU?
Your Retail Electricity Provider (REP) is who you choose and pay for your electricity supply. Your Transmission and Distribution Utility (TDU) owns the poles and wires and delivers the power. Remember, you can't choose your TDU, it's based on your location
Are renewable energy plans more expensive?
Not necessarily. Texas has abundant wind and solar resources, making renewable plans competitively priced. Many 100% renewable plans cost the same or even less than traditional plans.
What happens during a power outage?
Contact your TDU (not your REP) to report outages, since they own and maintain the infrastructure. Your TDU's phone number is on your electricity bill.
Can I have electricity without a deposit?
Some providers require deposits (typically $150-300) if you have poor credit or no credit history. Prepaid plans avoid deposits but require paying before you use power. Building a good payment history can help you avoid deposits in the future.
What is an Electricity Facts Label (EFL)?
The EFL is a standardized document that every plan must have. It shows the price per kWh at 500, 1,000, and 2,000 kWh usage levels, plus all fees, contract terms, and cancellation policies. Always read the EFL before signing up.
