Texas residential electricity rates entered 2026 in a holding pattern — neither the screaming highs of 2022 nor the giveaway floors of 2020. The average residential customer is paying somewhere between 11.5¢ and 12.6¢/kWh in spring 2026, depending on the TDU territory, with the cheapest 12-month fixed-rate offers landing in the 9.8–10.4¢ range at 1,000 kWh of usage.

Where rates stand in spring 2026

The headline number masks meaningful regional variation. CenterPoint (Houston) territory averages 11.8¢/kWh; Oncor (DFW, Central Texas) sits at 12.1¢; AEP Texas (South Texas) runs 12.4–12.6¢. The spread is mostly TDU delivery charges, which the PUCT updates on rate-case schedules independent of retail competition.

On the wholesale side, ERCOT day-ahead prices have averaged $34/MWh in Q1 2026, well below the $90+/MWh stretches of 2022 and a far cry from the $9,000/MWh price cap during Winter Storm Uri in February 2021. Generation supply has caught up with the demand growth that defined the previous three years.

What’s driving the 2026 outlook

Three structural forces are tugging at retail rates this year, and they don’t all point the same direction:

  • Reserve margins are tightening. ERCOT’s 2026 Capacity, Demand and Reserves Report shows a summer reserve margin near 13.7% — right at the 13.75% target. Any heat wave or generation outage above the baseline forecast will move spot prices fast.
  • Natural gas remains the swing fuel. Henry Hub gas prices have stabilized around $3.20/MMBtu, but Texas’s heavy reliance on gas-fired generation means any winter spike (or LNG export demand) flows straight into wholesale electricity.
  • Renewables keep adding capacity. Texas added 8 GW of solar and 3 GW of battery storage in 2025. In daytime hours during shoulder seasons, renewable abundance pushes wholesale prices toward zero — and that occasionally shows up in cheap fixed-rate retail plans.

Summer 2026: where the risk is

The summer outlook is the part of 2026 that should make Texans pay attention. ERCOT’s seasonal forecast projects a peak demand of 87 GW under normal weather and 92 GW under extreme heat. Available generation is forecast at 102 GW — comfortable on paper, tighter under freeze or heat events that drop multiple gigawatts of fossil capacity.

For variable-rate customers, that translates to upside risk. For fixed-rate customers signed at 9.9¢/kWh today, it means the contract you locked in March 2026 is going to look very smart by August.

How shopping behavior has shifted

Post-Uri, Texas residential customers have moved decisively toward fixed-rate, fixed-term plans. PUCT data shows fixed-rate enrollment grew from 78% of the residential market in 2020 to 91% in 2025. The few remaining variable plans are concentrated among month-to-month renters and customers who haven’t actively shopped in 18+ months.

The era of the variable-rate "deal" in Texas is functionally over. The math has been bad since 2021, and customers have figured it out.

What this means for you

If you’re on a fixed-rate plan signed before March 2025, you’re probably underpaying the 2026 market. Hold tight. If your plan ends between now and August, lock a new 12-month fixed rate before summer demand pricing kicks in. Compare current plans at your real usage and use the Electricity Facts Label — not the marketing page — to find the actual cheapest plan for your home.