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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Texas is one of 17 U.S. states to deregulate its energy market, according to the Environmental Protection Agency (EPA).
Deregulation means that customers have the power to choose their energy provider. The competition among providers helps keep retail electricity prices low compared to regulated markets.
This freedom also enables you to choose a provider that offers energy from renewable sources as opposed to traditional fossil fuels.
We explain how the energy market in Texas works, how to search for and switch providers, and how switching could save you money on your monthly electric bills or reduce your carbon footprint.
According to the most recent data from the U.S. Energy Information Administration (EIA), the average price of electricity in Texas as of January 2024 was 14.25 cents per kilowatt-hour (kWh).
The average price can vary based on your location in the state and where your power is generated. Monthly bill data available from Texas’ Public Utilities Commission (PUC) suggests that the average monthly electricity bill for customers consuming 1,000 kWh per month was around $173.03 in December 2023.
“Cheap electricity” in Texas could mean any rate below the average statewide cost of 14.25 cents per kWh. Some retail electricity providers (REPs) in Texas have fixed-rate plans with lower per-kWh prices, while others may only have variable-rate plans that drop below the average for some time.
The 10 most populated cities in Texas have energy costs between 8.8 and 12.9 cents per kWh. The rates available are based on your location and the plan and provider you choose.
As of March 2024, Houston and Austin have the lowest electricity rates available in Texas at just 8.8 cents per kWh from certain providers, which is nearly 40% lower than the state average. The table below includes the best electricity rate available in the top 10 most populated cities in Texas.
Note that we did not include San Antonio and El Paso, as these cities still have regulated energy markets.
The best way to compare electricity rates in Texas is to use the PUC’s website, Power To Choose. You can enter your ZIP code and see all the electricity plans available in your area.
Check a recent electric bill first to see your average monthly consumption. Most providers charge different rates based on how much power you use per month. The cheapest per-kWh rates are usually reserved for customers who use 2,000 kWh or more monthly. Based on data from the PUC, high-use customers pay around 2 cents less per kWh.
The price per kWh will always be important, but you should also consider the following when choosing a plan:
Yes, electricity rates in Texas are climbing. According to EIA data, the cost of electricity in Texas went up 0.42% between January 2023 and January 2024. During that same time period, the national average cost of electricity went down by 0.12%. EIA data from 2022 shows that the average price of electricity in Texas was 13.76 cents per kWh, suggesting an even larger increase of 3.56% between 2022 and 2024.
“In the wake of Winter Storm Uri in 2021, ERCOT [the Electricity Reliability Council of Texas] 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 OhmConnect and Verde Energy USA, another Texas REP.
“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.
Additionally, some traditional power plants using fossil fuels have been shut down for environmental reasons. Others have slowed power production in favor of renewable energy sources. This can also push prices up to compensate for the time the plant isn’t running at full capacity.
The power to choose in Texas means customers can choose their retail energy provider, or REP. Texas passed legislation in 1999 to deregulate its energy market, meaning customers can decide who they purchase their power from and what percentage of it comes from renewable sources. There are several key players in the local energy market:
REPs in Texas are free to create any type of energy plan they believe will be profitable, so deregulation has given rise to a variety of options.
A fixed-rate energy plan is one in which the price per kWh never changes. Your actual electric bill can change based on how much electricity you use, but the price you pay per kWh will stay the same throughout your contract.
A variable-rate energy plan has a varying rate per kWh. The price fluctuates based on demand. When demand is low, your price could be below average, but it could also spike during times of low supply or high demand.
Variable-rate plans often save you money over time, but they might not be practical if you’re on a tight budget, as some time periods could come with unusually high electricity prices.
Most energy plans require a deposit to sign up for service, which protects the provider in case of defaulted payment. Some providers have no-deposit electricity plans, which require that you pass a credit check in lieu of paying the deposit.
An indexed-rate plan is similar to a variable-rate plan, but the rate is tied to the real-time fair market price and isn’t determined by the provider.
Whaley recommended these plans over fixed-rate plans despite their potential downfalls. “If you take a historical average of real-time prices versus the fixed rates Texas consumers pay, real-time would win by a significant margin,” he said.
A time-of-use (TOU) plan has preset prices per kWh based on the time of day you use the electricity. In most cases, the times of day are determined by demand. During the day, when people are at work and using less electricity in the home, prices tend to be lower. In the evening, prices increase with demand as people return home. TOU plans can help save you money if you know you can prioritize energy consumption during the low-cost times of the day.
“TOU plans are the best tool the average homeowner can use to take some element of control over their electric bill,” Whaley said. “It requires thought and effort but it can pay real dividends.
“The real danger for consumers is that many sign up for these plans and then fail to alter their usage habits,” he continued. “That’s actually what most REPs that offer TOU are hoping for because the net rate to the consumer is higher than they would have paid under a conventional fixed-rate plan.”
Overall, TOU plans can help save you money on your utility bills, but only if you take advantage of low rates by using most of your electricity on the off-peak time schedule.
Green energy plans, also called renewable energy plans, guarantee that a percentage of your electricity will come from renewable energy sources. Based on the PUC’s comparison database, plans can belong to the following tiers:
Finally, there are business electricity plans for commercial electricity customers. These plans usually assume you need larger amounts of electricity, and they come with lower rates as a result. EIA reports suggest that the average price per kWh for businesses in Texas in January 2024 was 9.02 cents, which is 63% of the residential rate.
Finding the right REP starts with comparing per-kWh prices using the PUC’s site. The site can help you choose by giving each company a rating out of five stars to indicate its service quality.
Also, look at each plan’s cancellation fee and the percentage of energy that comes from renewable sources. You can prioritize these factors based on what you care about most to find the best provider for you.
Switching electricity companies in Texas is simple, and thanks to smart metering, you can do it from home without having to schedule in-person service.
Go to powertochoose.org and enter your ZIP code. You’ll see a list of every plan available in your area, sorted by the price per kWh. Note that these prices are based on a consumption rate of 1,000 kWh per month. If you use 500 kWh or less or 2,000 kWh or more, change your estimated usage on the left side of the page to see the price you’ll actually pay based on your energy usage.
Once you find plans that will fit your budget, review each one to ensure the other metrics align with your needs. Consider the following:
You can also click on the “fact sheet” to the right of each plan to see the electricity facts label (EFL), which contains a complete breakdown of the terms.
Call the number listed to the right of the plan you choose or click “sign up” to be taken to the provider’s website. If you go to the provider’s site, keep the plan name in mind, as you’ll have to search for it again.
You can sometimes establish electricity service in Texas on the same day you sign up, but it’s not an option with all providers, and there are time restrictions. The best way to go about initiating same-day service is to call the provider you’re interested in and ask about same-day service. Some will be able to establish service if you call before a specific time, usually between 2 p.m. and 6 p.m., based on the provider and demand.
Start your search for a new electricity plan on Power To Choose. After you enter your ZIP code, you can compare all the electricity plans available in your area, sort by price and filter based on other plan details.
The cheapest electricity rate in Texas might not always mean the best electricity plan. You should also consider the length of the contract, how much clean energy is included in your plan, the company rating of the REP and the rate type (such as fixed or variable).
If you’re setting up service for the first time in Texas and need power as quickly as possible, you should find a plan and then contact the provider to see if same-day service is available.
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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