The pitch

Many Texas electricity plans advertise a "free" bill credit: "$100 off when your usage exceeds 1,000 kWh" or "$125 when usage exceeds 2,000 kWh." The plan's average rate at the credit threshold looks fantastic. At 1,000 kWh exactly, an 8.9¢/kWh rate shows up.

The structure

The plan isn't actually 8.9¢. The underlying energy charge is typically 13-14¢/kWh. The $100 credit at 1,000 kWh drops the effective rate:

  • 1,000 kWh × 13.9¢ = $139
  • Credit: −$100
  • Total: $39 / 1,000 kWh = 3.9¢/kWh effective rate

With TDU delivery added back in, you land around 8-9¢/kWh all-in. That's the number you see advertised.

What happens if you don't hit the threshold

The credit disappears. At 950 kWh:

  • 950 kWh × 13.9¢ = $132.05
  • Credit: $0 (you didn't hit 1,000)
  • You pay the full 13.9¢ rate on every kWh you did use, plus TDU delivery.

Total effective rate: ~18-19¢/kWh including delivery. More than double the advertised rate, for missing the threshold by 5%.

Why this matters for Texas specifically

Texas weather has wide usage swings. A household that hits 1,500 kWh in summer can easily drop to 800 kWh in April. On a bill-credit plan, you get the advertised rate in summer and the punishing unadvertised rate in spring and fall.

Some Texans come out ahead on bill-credit plans — apartments that consistently hit 1,000+ because of an electric water heater, large homes that never drop below 2,000 — but most mid-sized households do worse.

Tiered bill credits

Some plans stack credits: $50 at 1,000 kWh, plus another $50 at 2,000 kWh. Read the EFL carefully — both thresholds have to be hit for both credits. Missing the 2,000 mark doesn't forfeit the 1,000 mark (usually), but missing the 1,000 forfeits everything.

How to tell if a plan has a bill credit

Look at the EFL's rate table. If the rate at 500 kWh is dramatically higher than at 1,000 kWh — say, 16¢ vs. 9¢ — that's a bill credit at work. If the three numbers at 500, 1,000, and 2,000 kWh are close together, it's a flat-rate plan with no surprise.

How to decide

If your usage is consistently above the credit threshold (every month, every year), a bill-credit plan can save real money. If it varies or you're not sure, a flat-rate plan is the safer bet. The effective rate might look 1-2¢ higher at 2,000 kWh — but it won't spike 10¢ higher when you miss a threshold.