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Carter Gaddis is a senior writer at USA TODAY Homefront. He is an experienced journalist who has written about roofing, sunrooms, title insurance and other home service topics. Carter has contributed to the TODAY SHOW parenting section, CBS SPORTS and ESPN, among other publications. He lives with his family in Central Florida, where he spends most weekends at theme parks or watching English soccer on TV.
Dan Simms is a contributing writer at USA TODAY Homefront specializing in home repair, renovation and renewable energy. While working as a property manager for one of the largest real estate management firms in New York, Dan worked alongside contractors and renovation specialists to prepare homes for sale. He is an avid DIYer and has completed a shed construction and a bathroom renovation in his own home and investment properties. He lives on Long Island, New York. Reach out to him on LinkedIn.
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Many municipalities in Texas switched to deregulated energy in 2002, giving residents of those areas a choice among electric companies.
The Electric Reliability Council of Texas (ERCOT) manages about 90% of the power load for those deregulated regions, accounting for about 26 million Texans. But each Texan can choose their own electric company — also known as a retail energy provider (REP).
Texas consumers who live in deregulated energy markets have many tools available to help them compare electricity rates and plans. Here, we provide all the information you need to begin your search for the best electricity plan.
Electricity prices vary only slightly, if at all, among electric companies serving Texas’ 20 largest deregulated energy markets. There is consistency within the regions served by each of the six transmission and distribution (TDU) companies that monitor and maintain Texas’ electricity infrastructure.
Here are five major TDUs and the population centers they serve:
In March 2024, Lubbock switched to energy deregulation after years of operating under the regulation of Lubbock Power and Light. As a result, Lubbock’s electricity rates remain in flux as of early May 2024.
The table below shows electricity rates per kilowatt-hour (kWh) in several Texas cities.
Choosing the best electricity plan might seem daunting initially, but breaking it down into three manageable steps helps simplify the process.
Find the website for a retail provider that interests you. Examples can be found in the ratings table below. Most companies provide an online form that allows you to enter your ZIP code, producing a list of the company’s energy plans. Type in your ZIP code and read through the plans.
You’ll also get additional information about each plan, including the contract length, changes in cost by electricity usage, the provider’s customer rating, the cancellation fee, rate type (fixed, variable or prepaid) and the percentage of your energy that will come from renewable sources such as wind or solar.
If you find a plan that appeals to you, move on to the details. Many plans offer tiered pricing — usually lower per kWh if you use more energy. Rate tiers are often capped at thresholds of 500, 1,000 and 2,000 kWh per month.
Check your current electric bill for your average monthly energy usage, then use that to estimate your monthly kWh usage. The price can change based on your estimated consumption.
Once you find a plan you like, you can generally sign up immediately by providing your address and payment method. At this point, you’ll be able to initiate service.
While rates and plan choices vary among electric companies, choosing an energy provider is not only about the bottom line on your electric bill. Every circumstance is unique, and your choice might hinge on additional services or a company’s reputation.
Here are the factors to consider when deciding what retail energy provider is best for you.
Plans are presented based on their rate per kWh. Residential energy costs in Texas hovered around 14.3 cents per kWh in April 2024, according to the Energy Information Administration (EIA).
In Houston, the average rate per kWh in March 2024 was 17.6 cents per kWh, according to the Bureau of Labor Statistics (BLS). Dallas’ average cost of electricity was 17.5 cents per kWh for the same time.
However, kWh rates are only one facet of the total cost. To find the best electricity rates, consider every aspect of the bill. Your monthly electric bill will be determined by your base rate, your rate per kWh and the amount you owe each month in additional taxes and fees.
A portion of your monthly bill goes toward the cost the electric company incurs from the TDU, which monitors and maintains the infrastructure used to deliver electricity to homes and businesses.
Renewable energy buybacks, bill credits and any minimum usage fees in your plan might also affect your monthly energy rates.
Most providers run a credit check before you sign up to determine whether to charge a prepaid deposit. If you decide to switch electric companies before the end of your contract, you may be charged an early termination fee. Our research shows providers charge between $20 and $300 for early termination.
Most providers display the electricity rate, transmission and distribution price and other recurring fees within their plans’ details. They might not include nonrecurring fees or taxes, so ask about that before you sign your agreement — or read the electricity facts label (EFL) and full terms of service.
Energy plan types offered by most Texas electric companies:
Some energy companies have served Texas for generations — even before Galveston became the first Texas city to install electric lights in 1883. Others came into being shortly after the state’s energy market was deregulated in 2002.
No matter how established the provider is, you should perform your due diligence by researching consumer sentiment.
Ask your friends and neighbors for their favorite Texas REPs — or ask about any red flags. Look up the company’s Better Business Bureau (BBB) page, where you’ll find a BBB-assigned letter grade (or NR for Not Rated) and any consumer alerts about the company.
The Public Utilities Commission of Texas (PUCT) also tracks consumer complaints it receives about every REP. The PUCT considers the ratio of complaints per customer and assigns ratings on a 5-star scale. The more stars are assigned, the lower the ratio of consumer complaints against the company.
While price, number of plan options and consumer sentiment are the most important factors for selecting a REP, many companies offer perks that improve the customer experience and add value to the deal.
For example, if you are concerned about your heater or AC breaking down, find out if your REP provides additional surge protection or backup power options. If reducing your home’s carbon footprint is a priority, determine if your REP offers smart thermostat installation or automatic usage monitoring.
Some electric companies in Texas also offer services similar to home warranties, covering some or all of the cost to repair or replace your home’s major systems or appliances.
In the graphic below, see how our top 12 providers stack up regarding our star ratings, their PUCT complaint scorecard ratings and their BBB ratings.
Our ratings and the Public Utility Commission of Texas (PUCT) complaint scorecard ratings are out of 5 stars.
The three REPs listed below serve cities throughout Texas and have earned 5-star and 4-star customer ratings from the PUCT’s Power to Choose site. These three energy providers are also our highest-rated out of the two dozen we’ve reviewed.
Green Mountain Energy has built a reputation in Texas and beyond for its commitment to renewable energy sources. Its residential and commercial plans are billed as “pollution-free” and its pricing is near or meets industry standards.
Based on its reasonable rates, excellent reputation among consumers and quality customer service, we rated Green Mountain 4.5 out of 5 stars — the highest among the two dozen Texas electric companies we’ve reviewed.
TXU Energy is one of the largest electric companies in Texas and, like many prominent REPs, shows a strong commitment to renewable energy. Its offerings include a basic 12-month plan for 14.9 cents per kWh.
One of TXU’s plans offers free at-home charging for electric vehicles between 7 p.m. and 1 p.m. daily. Any electric vehicle charging that takes place outside of those hours will cost the full per kWh rate.
We gave TXU Energy 4.4 out of 5 stars — tied with Reliant Energy for our second-best score.
Like TXU, Reliant Energy is a venerable energy company that successfully transitioned to the deregulated market. Even though the company is not rated by BBB, Reliant earned 4.4 out of 5 stars based on our review standards.
Also like TXU, Reliant offers renewable energy options. Most of its plans include some sustainable energy sources.
Reliant also offers a wide range of additional services, such as air conditioning and heating systems protection, surge protection and portable backup power.
The biggest difference between consumers who want to switch between deregulated electric companies and those new to deregulated energy is familiarity with the process, contract language and industry terms.
If you are a new deregulated energy customer in Texas, you should know that many electric companies require you to use a minimum amount of electricity each month. Some charge a fee if your usage falls short of that predetermined minimum.
When an electricity contract expires, some companies automatically renew every month. This can affect your rate, so familiarize yourself with renewal policies.
Most Texas electric companies charge an early cancellation fee — also called an early termination fee — if you decide to switch companies before the end of your contract.
Some electric companies require a security deposit, sometimes spread out in payments over time and almost always refundable. Providers might waive the deposit if your credit history is favorable. However, an electric company might require an upfront deposit paid in full if your payment history is inconsistent.
Retail electricity providers in Texas are required to provide an electricity facts label (EFL). The EFL is usually a one- or two-page document that includes sections on pricing, key terms and questions, and disclosures.
The pricing section breaks down costs related to electricity delivery. In addition to listing the price per kWh, this may include costs based on monthly usage, the amount your provider pays the utility company, meter fees, taxes and other charges.
The terms section includes details about the length of your contract, the deposit policy and other associated fees.
The disclosure section covers cancellation fees, the percentage of renewable energy you’ll receive in your plan, and whether the plan is considered a prepaid or pay-in-advance plan.
Most retail providers in Texas include some renewable energy sources for the power they sell to consumers. Renewable sources include wind, solar, biomass, landfill gas or hydroelectricity.
Electricity providers in the state can designate Texas-produced natural gas as a green energy source in Texas.
Approximately half of companies guarantee that some of their power will be generated using green energy sources.
Many prominent electric retail providers — such as Reliant, TXU Energy and Constellation — offer multiple plans built on renewable energy sources. Two electric companies in Texas stand out in the green energy market: Green Mountain Energy and Gexa Energy.
Green Mountain is a well-known green energy leader in Texas. The provider offers seven wind-powered plans over 12, 24 or 36 months with rates between 14.5 cents and 16.9 cents per kWh. It offers two solar plans for 18 months at 15.9 cents per kWh or 12 months at 16.9 cents per kWh.
Green Mountain also offers wind energy plans that include no charges for electricity used between 8 p.m. and 6 a.m., with fixed rates of 16.9 cents per kWh for 12 months or 16.5 cents per kWh for 24 months. The company offers renewable energy buyback plans, which allow you to earn credits for solar energy you don’t use.
Gexa is another electric company with a deep selection of green energy plans. All of Gexa’s 17 plans are categorized as renewable energy. Its energy sources include wind, solar, nuclear power and natural gas. The company also offers electric vehicle owners solar energy buyback options and specialty plans.
Residents can choose which company to buy electricity from in a deregulated energy market. In regulated energy markets, consumers must use the electric company assigned to them based on where they live.
In addition to consumers and government agencies, there are three major players in the deregulated energy market. These include the following:
For example, every electricity plan in the Dallas–Fort Worth metroplex (officially called Dallas–Fort Worth–Arlington) relies on infrastructure managed and monitored by TDU Oncor Energy Delivery Company.
Whether you are a longtime Texas resident who wants to switch electric companies or are navigating deregulated energy for the first time, the state of Texas provides a useful online tool called Power to Choose.
This state-run website provides a detailed list of available electricity plans when you type in your ZIP code. Along with the name and star rating of the REP, the displayed results include the length of the plan in months, the price per kWh, any cancellation fee and other information to help you make an informed decision.
The graphic below outlines the average annual Texas electricity rates per kWh from 2020 to 2023.
According to EIA annual cost data, electricity rates in Texas are climbing — as are rates in the rest of the United States. From 2020 to 2023, the average electricity cost in Texas climbed by 22.3%, from 11.71 cents to 14.32 cents per kWh.
Texas electricity costs remain lower than the national average. However, the nationwide increase over the past four years has come at a slightly lower percentage than in Texas.
From 2020 to 2023, the average electricity price across the nation increased by 21.5% to 15.98 cents per kWh — almost 1 percentage point less than in Texas.
Additionally, the repercussions of the 2021 widespread power outage during Winter Storm Uri still can be felt in Texas.
“In the wake of Winter Storm Uri in 2021, ERCOT has switched to a very conservative operational posture, and this has incentivized dispatchable resources to not fully commit to the real-time market,” said Don Whaley, current advisor to Texas REP OhmConnect and past president of two other Texas REPs.
“In addition, environmental pressure and costs are forcing either early retirement of fossil generation or more conservative dispatch,” he said.
Part of the reason prices are increasing is that past periods of unusually high demand — such as during unexpected storms — have led power production facilities to throttle supply to save power in case of another spike in demand. The effective dip in supply pushes prices higher.
Some traditional fossil-fuel power plants have been shut down for environmental reasons. Others have slowed power production in favor of renewable energy sources. This can also increase prices to compensate for the time the plant isn’t running at full capacity.
Based on data from the EIA, Texas is the second most likely state to see power outages behind Louisiana. Texas residents saw more hours of power interruption in 2021 than all but two states.
“The challenge Texas faces now is that it needs more power generation that is dispatchable — natural gas or nuclear, for example — yet the investment into power plants of this type is risky,” said Brandon Young, CEO of Payless Power. “The Catch-22 is that everyone wants clean energy and, likewise, reliability. At present, clean energy is not reliable because it is hard to predict when the wind will blow or when the sun will shine without clouds,” he added.
Familiarizing yourself with energy industry terms is important, especially if you are new to Texas’ deregulated energy market. Here are a few acronyms and terms you should know:
The Public Utility Commission of Texas provides a form that allows consumers to file official complaints directly to the commission. The PUCT asks that consumers contact their electric companies to seek a resolution before filing a complaint.
Yes — if you are moving to a home in the same service area as your former home. If you are moving to another delivery area, you must sign a new agreement. You might be charged an early termination fee, as well.
During extreme weather events, such as deep freezes or heatwaves, PUCT consumer protection rules prohibit providers from shutting off the power because of nonpayment. For example, a winter moratorium is triggered if a customer’s local temperature is at or below 32 degrees Fahrenheit for 48 hours.
If you live in one of Texas’ deregulated energy markets, there’s no need to feel trapped in a deal. Even if you have to pay an early termination fee, you always have the option to switch to another provider.
The best strategy is to make sure you know every detail about your plan before agreeing to a contract. Avoid surprises by reading your EFL and your terms of service. Check past electric bills to find out your average electricity use — this will help you estimate your future usage.
After you’ve made a decision, monitor and manage your electricity usage over time to ensure your Texas electricity plan is still right for you.
We review and rate retail electricity providers in Texas to provide the information you need to select the electric company that fits your budget and home energy needs. The best retail electricity providers offer a variety of plans at reasonable rates, as well as consistent, helpful customer service.
Our ratings are based on our detailed methodology. We score companies out of 100 points using review standards based on the plan types offered, the cost of those plans, the companies’ reputations and the customer service features they offer. We then divide their total scores by 20 to determine a rating out of 5 stars.
BBB and PUCT customer ratings are accurate as of May 2024.
Editorial note: The name “Homefront” refers to the alliance between USA TODAY and Home Solutions that publishes review, comparison, and informational articles designed to help USA TODAY readers make smarter purchasing and investment decisions about their home. Under the alliance, Homefront provides and publishes research and articles about home service and home improvement topics.
Homefront has an affiliate disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Homefront editorial staff alone (see About Homefront). Homefront adheres to strict editorial integrity standards. The information is believed to be accurate as of the publish date, but always check the provider’s website for the most current information.
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