The holdover trap

When your Texas electricity contract ends, your provider has to keep serving you, but at whatever rate they want. These “month-to-month” or “holdover” rates are almost always the most expensive plan that provider offers.

The average holdover rate in Texas is 16.8¢/kWh. The average fixed-rate plan is 11.4¢/kWh. That gap costs a typical household about $340/year.

Your 15-minute checklist

  1. Find your contract end date. Look for your most recent “Your Electricity Facts” letter or the renewal notice that arrives 60 days before expiration.
  2. Pull your 12-month usage. Log into your provider’s portal and note your monthly kWh total.
  3. Run our comparison. Enter your ZIP and average usage. Sort by total monthly cost.
  4. Pick a 12- or 24-month plan with your target usage tier.
  5. Enroll before your current plan expires. Switching causes no service interruption. Your power never goes out, and only the name on your bill changes.

Why the holdover rate is so high

Your retail provider, the REP that sells you the plan, doesn’t own the poles and wires. Your TDU does: Oncor, CenterPoint, AEP Texas, TNMP, or LP&L, depending on where you live. The TDU keeps delivering power no matter what. So when your contract ends, the lights stay on. Nothing breaks. You may not even notice.

That’s the trap. There’s no shutoff, no warning siren, just a quietly higher rate on next month’s bill. The provider has no reason to put you on a cheap plan automatically, and most don’t. The default is the expensive default.

How to read the renewal notice

Texas rules require your provider to mail or email a notice before your fixed-rate plan ends. Open it. Two numbers matter:

  • Your contract end date. The day the holdover rate kicks in.
  • The new rate they’re offering. Almost always higher than what a fresh comparison turns up.

Treat the renewal offer as a starting bid, not a deal. You’re free to shop the whole market, and you usually should.

Read the EFL before you sign

Every plan comes with an Electricity Facts Label, the EFL. It’s the one-page document that tells you what you’ll actually pay. Three things to check:

  • The average price at your usage tier. Texas EFLs quote a rate at 500, 1,000, and 2,000 kWh. If your home runs at 1,200 kWh a month, the 1,000 kWh number is closer to your reality than the headline rate the provider advertises.
  • Fixed vs. variable. A fixed-rate plan locks your energy charge for the full term. A variable-rate plan can move month to month, which is exactly how holdover rates climb. For most households, fixed is the safer renewal.
  • The early termination fee. If you switch mid-contract later, this is what it costs.

Mistakes that cost the most

  • Waiting for the lights to go out. They won’t. The holdover rate bills you silently while you assume nothing changed.
  • Renewing on the provider’s first offer. It’s rarely their best plan and almost never the market’s.
  • Comparing on the headline rate alone. A teaser rate at 1,000 kWh can hide a steep climb at the usage your home actually pulls. Match the plan to your real kWh.

Who should act first

If your contract ends in the next 60 days, you’re the target audience for this checklist. Start now. If you’re already on a month-to-month or holdover rate, you’ve been overpaying since the day your last term lapsed; switching today stops the bleeding. There’s no penalty for leaving a holdover plan, so there’s no reason to wait.

Timing matters

Providers run their best offers in March through May (before summer demand) and October through November (after summer). If your contract ends in July or August, you can still switch, but you’ll pay more than if you’d locked in during the shoulder season.

A few quick questions

Will switching interrupt my power? No. Same wires, same meter, same TDU. The only thing that changes is which provider bills you.

What if I miss my end date? You roll onto the holdover rate. Switch as soon as you can. There’s no early termination fee on a month-to-month plan, so the only cost is the extra you’ve already paid.

Do I have to call my current provider to cancel? No. When you enroll in a new plan, your new provider handles the switch. Signing up is the cancellation.