The trick hiding in plain sight

Open any Texas electricity marketing page and you’ll see a single headline rate: 9.8¢/kWh, 10.2¢/kWh, whatever. That number is engineered. It’s the blended rate you pay if, and only if, you use exactly 1,000 kWh in a given month.

Use 500 kWh? Your effective rate jumps to 13.6¢. Use 2,000 kWh? It might drop to 8.9¢. Providers are required to disclose this on the Electricity Facts Label (EFL), but almost nobody reads them.

How the inflation works

Three components drive the mismatch:

  • Base charges. A flat $9.95/month fee that barely moves the needle at 2,000 kWh but triples your effective rate at 500 kWh.
  • Minimum-usage penalties. Many plans charge an extra $9.99 if you use under 1,000 kWh. That penalty alone adds 2¢/kWh to a small user’s bill.
  • Tiered rates. A plan might charge 12¢ for the first 500 kWh, then 8¢ after. The advertised “average” is just a weighted guess.

Run the real math in 60 seconds

Pull up your last 12 months of usage and calculate your average. Then for each plan you’re considering:

  1. Find the EFL (every provider is required to link to it).
  2. Read the three-tier disclosure: 500 / 1,000 / 2,000 kWh.
  3. Pick the tier closest to your actual usage.
  4. Use that rate to estimate your bill, not the marketing number.

The manual version of this is what most Texans never bother to do. The automated version takes about 30 seconds.

Why the EFL is the only number that matters

The advertised rate lives on a banner ad. The truth lives on the Electricity Facts Label. Every retail provider (REP) in Texas has to publish one for every plan, and it has to show the average price at 500, 1,000, and 2,000 kWh. That three-row table is the whole game. The marketing rate is just the middle row, dressed up as if it applied to everyone.

The EFL also spells out the parts that move your bill but never make the ad: the base charge, any minimum-usage fee or credit, whether the rate is fixed or variable, the contract length, and the early-termination fee. Read those five lines before you read anything else. They decide what you actually pay.

One thing the EFL does not control is your delivery cost. Your TDU (Oncor, CenterPoint, AEP Texas Central, AEP Texas North, TNMP, or LP&L depending on where you live) owns the poles and wires and sets a regulated delivery charge that every plan passes through. You can't shop your way out of it, but a good EFL already bakes it into those three price points, which is exactly why the EFL beats the banner.

Fixed vs. variable: where teaser rates get dangerous

A teaser rate on a fixed plan misquotes you. A teaser rate on a variable plan can do worse: it can reset. Variable-rate plans let the provider change your price month to month after an introductory period, so the 9.8¢ that lured you in can climb with nothing to stop it. Fixed plans lock the energy rate for the contract term. The 500/1,000/2,000 math still applies, but at least the rate itself won't drift. When you compare the EFL, confirm which kind you're looking at. A low headline number on a variable plan is a sample, not a promise.

The mistakes that cost the most

  • Shopping on the headline rate. It's the 1,000 kWh number and nothing else. If your home doesn't average 1,000 kWh, it was never your rate.
  • Ignoring your own usage shape. A small apartment that burns 500 kWh and a four-bedroom house that pulls 2,000 kWh should almost never pick the same plan. Base charges and minimum-usage penalties punish the low user; tiered rates can punish the high one.
  • Chasing a bill credit you won't earn. Some plans dangle a credit that only triggers above a usage threshold. Miss it by a few kWh and the "cheap" plan is suddenly the expensive one.
  • Forgetting the switch costs you nothing in service. Some people stall on a bad plan because they fear an outage. There isn't one. Same wires, same meter, same TDU. Only the name on the bill changes.

Who gets hurt, and who gets a deal

Below 800 kWh or above 1,500 kWh a month, the advertised rate is almost always wrong for you, usually higher than promised, occasionally lower. Heavy users sometimes get a genuine bargain when a plan's high-tier rate drops below the headline, which is the rare case where the teaser undersells. Median users near 1,000 kWh are the only group the marketing number actually fits, and even they should confirm the base charge before signing.

Quick questions

Is the teaser rate illegal? No. Providers are allowed to advertise the 1,000 kWh average. They're also required to publish the full EFL, so the real numbers are always one click away.

Where do I find my real usage? Your last 12 monthly bills, or your usage history through Smart Meter Texas. Average those, then match the closest EFL tier.

Does switching providers ever interrupt my power? No. The wires and meter belong to your TDU, not your REP. Switching only changes who bills you.