How to Choose a Texas Electric Company (Without the Tricks)

The cheapest plan on the comparison page is almost never the cheapest plan when your bill arrives.

In Texas, that's not an accident. The deregulated market is engineered to put one eye-catching number — usually a per-kWh rate — at the top of every offer, while the actual cost of the plan lives in a separate document called the Electricity Facts Label. Most people never open it.

The market is built on that assumption.

This guide is for the rest.

The short version

A Texas electricity plan is a contract, not a price tag. You're choosing four things at once: the company, the contract length, the usage band your home falls into, and the penalty for leaving early. The advertised rate matters less than all four put together.

The whole game is making sure those four things match how you actually use power. That's it. The rest of this guide is mechanics.

Why the rate on the page is misleading

Every plan in Texas is tiered. The rate you see advertised — say, 9.7¢ per kWh — is calculated at one specific monthly usage level, almost always 1,000 kWh. If you use exactly 1,000 kWh in a month, you pay the advertised rate.

If you use 600 kWh, you might pay 13¢. If you use 2,000 kWh, you might pay 10.5¢.

The reason: most "cheap" plans bundle a bill credit — say, $75 off if you use 1,000–1,999 kWh in a month. Miss the threshold by one kWh and the credit disappears. The plan that looked cheap suddenly costs you 40% more per kWh than the plan you didn't pick.

This isn't a glitch. It's the product.

Step 1: Know your usage before you shop

Pull your last 12 electricity bills. If you have them, average the kWh column. If you don't, you can request historical usage from your current Retail Electric Provider (REP), or pull it from Smart Meter Texas — free, all Texas homes with a smart meter.

If you're moving in and have no history, estimate by home size:

• 1-bedroom apartment: 600–900 kWh/month
• 2-bedroom apartment or small house: 900–1,200 kWh/month
• Mid-size house (1,500–2,500 sq ft): 1,200–1,800 kWh/month
• Larger house with electric heat or pool: 2,000+ kWh/month

These are rough. Your usage will vary by season — Texas summers can double a typical bill from May through September. If your average is borderline between two bands, assume the lower band. That's where most plans punish you.

Step 2: Read the Electricity Facts Label (EFL)

Every plan in Texas is required by the PUCT to publish an EFL — a one-page disclosure that shows what you'll actually pay. Reading it takes two minutes and saves you hundreds of dollars a year.

The EFL shows three columns, usually at 500 / 1,000 / 2,000 kWh. Each column gives you the average price per kWh at that usage level. That's the number that matters — not the headline rate.

Look at the column closest to your actual usage. That's roughly what you'll pay. If your monthly usage is 750 kWh, your real rate is somewhere between the 500 and 1,000 kWh columns — usually closer to the lower one.

The EFL also discloses:

• The base charge (a flat monthly fee, often $5–$10)
• Minimum usage fees (a penalty if you use less than 1,000 kWh — common, easy to miss)
• Bill credit terms (the threshold, the amount, the eligible band)
• TDU pass-through charges (the delivery fees from your local utility — Oncor, CenterPoint, AEP Texas, or TNMP — which are the same across all REPs but stated separately)
• The contract length and early termination fee

If a plan is advertised at 9.7¢ but the EFL says the average price at 500 kWh is 14.8¢, the plan is wrong for you if you're a 500 kWh household. The advertised rate is a marketing number, not your number.

Step 3: Check the contract length and the ETF

Most fixed-rate plans in Texas come in 12-month or 24-month terms. A few offer 6-month, 36-month, or month-to-month options. The longer the contract, the lower the rate tends to be — but the bigger the commitment.

The early termination fee (ETF) is what you pay if you leave the contract before it ends. It typically ranges from $150 to $300, sometimes scaled by remaining months. It applies if you switch providers, but not if you move out of the service area (a Texas-specific protection — you can usually break a contract without penalty by showing you moved).

Pick a contract length you can actually serve out:

• Renting and might move in under 12 months: consider month-to-month or a short-term plan, even at a higher rate. The ETF on a 12-month contract often exceeds what you'd save.
• Settled and willing to lock: 12 or 24 months. The 24-month rate is usually 0.5–1.5¢ lower per kWh.
• Already in a contract: check your renewal date and your current ETF before you shop. Sometimes the math says wait.

Step 4: Hunt for the gotchas

This is the part most "how to choose" guides skip. Texas plans hide their math in three places. Find all three before you sign.

Bill credit thresholds. If the plan offers a credit (like "$75 off when you use 1,000+ kWh"), check what happens when you don't hit it. If your usage drops to 950 kWh in a mild month, you lose the entire credit — turning a $97 bill into $172. Plans built around bill credits are designed for people whose usage stays inside a narrow band.

Minimum usage fees. Some plans charge a flat penalty ($5–$9.95/month) if you use under 1,000 kWh. For small apartments or part-time residences, this fee can wipe out any rate advantage.

Tiered base charges. A few plans hide a high monthly fee that only shows up on the bill, not the EFL summary. Read the EFL line by line. Anything labeled "Service Charge," "Customer Charge," or "Base Charge" is added to every bill regardless of usage.

If you cross out all three of these and the plan still looks competitive at your actual usage, you have a real candidate.

Step 5: Vet the provider, not just the plan

A great rate from a terrible REP is not a great deal. The Texas market has roughly 130 active REPs, and they range from large, stable companies to small operations with serious billing problems.

Two places to check:

The PUCT complaint scorecard at puc.texas.gov. Every REP's complaint volume is public. A provider with 200 complaints per 100,000 customers is operating differently than one with 20. The complaints themselves are categorized — billing, switching, disconnection — which tells you where the friction is.

Real reviews from current customers. Skip the "Top 5 Cheapest!" affiliate sites; their rankings reflect commissions, not quality. Look for forum posts on r/texas, NextDoor threads in your neighborhood, and Google reviews with detail. Pay attention to comments about billing accuracy, customer service hold times, and what happens when you try to leave.

If a REP has been in business under three years, treat the lack of track record as a risk. If the same REP keeps surfacing with billing complaints, the rate isn't worth it.

Step 6: Time the switch

Two timing rules.

If you're moving in, order service 5–7 business days before your move date. Most REPs can activate within 1–3 business days, but the buffer protects you against weekends, holidays, and meter issues. There's no premium for the buffer — you pay from the day service starts, not the day you ordered.

If you're switching, request the switch effective on your next billing cycle's start date. Mid-cycle switches create overlapping bills (one from the old REP for partial month, one from the new) that are easy to misread. Switching effective at the cycle boundary keeps the math clean.

You do not need to call your old REP to cancel. Texas's MOVE/SWITCH protocols handle that automatically once you sign up with the new one. If your old REP calls trying to retain you, that's a marketing call — not a required step.

When not to switch

This is where most guides stop being honest. Here's when switching makes you worse off:

Your current contract has more than three months left and the ETF exceeds your projected savings. Run the math: monthly savings × months remaining vs. ETF. If the ETF wins, wait it out.

You're inside the 14-day buyer's remorse window on a new plan. You can cancel without penalty in the first 14 days — but if you've passed it, the next switch costs you.

Summer is two months away and you haven't locked. Texas rates spike May–August. If you're shopping in March on a month-to-month plan, you're exposed. Lock something before the seasonal climb.

Your projected savings are under $10/month. A plan that saves you $7 a month is not worth the friction of switching, the risk of a billing transition error, or the time spent reading EFLs. Threshold matters. Below it, stay.

You're in a hardship situation and need certainty more than savings. A slightly more expensive plan with a stable REP and known customer service beats a cheaper plan with a small operator if your margin for error is thin.

The honest close

The Texas electricity market punishes people who don't read carefully. It rewards people who do. The reading is the entire job.

Twenty minutes with the EFL of any plan you're considering — at your actual usage band, with the gotchas checked, against a provider with a clean complaint record — beats every shortcut, every "Top 5" list, every too-good-to-be-true rate on the home page.

The cheapest plan on the page is rarely the cheapest plan when your bill arrives. But the right plan is findable. It's just behind a one-page document the market is hoping you'll skip.

Don't skip it.

» MORE: Understanding the EFL · Fixed vs. variable rate plans