How to Choose an Electricity Plan in Texas

Updated: September 2026

Living in a state with a deregulated electricity market gives you the power to choose your energy provider. Having options is great, but navigating the sea of available rates, fees and contract terms can sometimes feel overwhelming. You want a plan that fits your budget, offers reliable service and gives you peace of mind year-round.

This guide will explain how to pick an electricity plan in Texas that matches your lifestyle and helps you avoid costly surprises down the road.

Understanding the Texas Deregulated Electricity Market

To understand how to choose an electricity provider, it helps to know how the Texas market works. In a deregulated market, the utility company that maintains the power lines and restores outages is separate from the retail electricity provider that sells you your power.

Your local Transmission and Distribution Utility (TDU) — such as Oncor or CenterPoint — owns the infrastructure. You cannot choose your TDU because it's based on your ZIP code. However, you can choose your retail electricity provider. Your provider buys power on the wholesale market, creates energy plans, delivers your customer experience, manages your billing and provides customer support.

This competition means electricity companies have to work to earn your business. It also means you'll see a wide variety of pricing structures, plan features and promotional offers. Navigating these options requires looking beyond just the headline price and evaluating how a plan functions in the real world.

Step 1: Start With Your Monthly Electricity Usage

If you want to know how to pick electricity plan options effectively, your actual energy usage is a good starting point.

Electricity usage is measured in kilowatt-hours (kWh). In Texas, providers display the average price per kWh at three specific usage levels: 500, 1,000 and 2,000 kWh per month. A tiered plan that offers a fantastic rate at 2,000 kWh might end up being much more expensive than you anticipate if you only use 800 kWh.

How to Find Your Usage

Before you start comparing plans, gather your past electricity bills. Look for the following trends:

• Your average monthly electricity usage across the entire year
• Your highest-use months (typically July and August in Texas)
• Your lowest-use months (often during the mild spring and fall seasons)
• Whether your usage usually hovers closer to 500, 1,000 or 2,000 kWh

If you're setting up new electricity service and don't have a usage history for your address, you'll need to estimate. A small apartment will generally use around 500 to 800 kWh per month. A mid-sized home might average 1,000 to 1,500 kWh, while a large home with a pool and multiple air conditioning units can easily exceed 2,000 kWh during the summer.

Step 2: Learn About Common Electricity Plan Types

Once you know your typical usage, it's time to narrow down your options. Electricity plans come in several different structures, and the right choice depends on how much you value predictability versus flexibility. Some plans may combine more than one feature.

Fixed-Rate Electricity Plan

A fixed-rate electricity plan keeps your energy rate exactly the same for the entire length of your contract. This is generally the most popular option because it provides stability. When summer temperatures soar and wholesale market prices tend to spike, your energy rate stays locked in. Your total bill will still fluctuate based on how much power you use, but the rate you pay for the electricity itself will not change. Fixed-rate electricity plans can include lots of other benefits, like cashback, bill credits, simple rates and more.

Variable-Rate Electricity Plan

A variable-rate electricity plan means your rate can change from month to month based on market conditions, provider pricing and many other factors. While these plans don’t require a long-term commitment, they can expose you to price spikes. This option typically serves best as a short-term bridge if you are between long-term contracts, planning a move or if wholesale market prices are continually low.

Time-of-Use Electricity Plan

A time-of-use electricity plan offers different pricing depending on when you consume power. You might see plans offering free nights, free weekends or discounted rates during specific off-peak hours. These plans can unlock significant savings, but they require a proactive approach. If you have a consistent work schedule or can easily shift major usage like running the dishwasher, adjusting your A/C or charging an electric vehicle to the discounted hours, this could be a great fit.

Indexed Electricity Plan

An indexed electricity plan ties your rate to a publicly available pricing formula or market index. These can be more complex and depending on what their pricing is tied to, can result in highly unpredictable bills. You should fully understand the underlying mathematical formula before choosing an indexed option.

Renewable Electricity Plan

If supporting clean energy is a priority for your household, a renewable electricity plan ensures your usage is offset by renewable energy credits from sources like wind or solar. Many providers now offer 100% renewable options that are highly competitive with traditional plans.

Step 3: Learn How to Read the Electricity Facts Label

When you compare electricity providers, the marketing materials will always highlight the most attractive features. To understand exactly how much you will pay, you must read the Electricity Facts Label (EFL).

The Public Utility Commission of Texas mandates that every electricity plan includes an EFL. This standardized document breaks down the true cost of the plan so you can compare options fairly.

Here's what you should look for when reviewing an EFL:

Energy Charge: This is the rate the provider charges for the actual electricity you consume.

Utility Delivery Charges: These are pass-through fees from your local TDU that cover the cost of maintaining poles, wires and meters. TDU delivery charges are based on your electricity consumption and are passed through without markup, regardless of which retail electricity provider you choose. The TDU typically charges a flat monthly fee plus a small charge per kWh.

Base Charge: Some plans include a flat monthly base charge.

Bill Credits: These plans incorporate usage-based bill credits and are great if you have consistent monthly usage. For example, a plan might offer a $50 credit if you use 1,000 kWh or more in a billing cycle. If you use 999 kWh, you wouldn't receive the credit. Be sure to review your usage carefully to see if these plans could be a good fit for you.

Early Termination Fee: If you sign a long-term contract and decide to leave your provider before the term expires, you will likely face an early termination fee.

Step 4: Evaluate Contract Length and Flexibility

Your living situation should dictate your contract length. Providers offer plans ranging from month-to-month to multiyear.

If you own your home and plan to stay for years, a long-term fixed-rate plan offers incredible peace of mind. You can set up autopay, forget about market fluctuations and enjoy predictable billing.

If you're renting or expect to move soon, a shorter contract might be better. Keep in mind that providers will waive the early termination fee if you provide proof that you're moving to a new address. However, if you simply want the freedom to switch providers whenever you find a better rate, you'll need to weigh the cost of the cancellation fee against the potential savings.

Some providers also offer a prepaid plan or a no-deposit option. These plans allow you to pay for your electricity in advance and avoid traditional credit checks.

Step 5: Consider Your Home Size, Lifestyle and Habits

The best electricity plan for a busy family in a large suburban home is rarely the best plan for a single professional in a high-rise apartment. Ask yourself a few questions to narrow down your choices: 

• Do you work from home? If you’re running the air conditioner and electronics all day, you’ll likely benefit from a simple, straightforward fixed-rate plan rather than a time-of-use plan that charges premium rates during daytime hours.
• Do you own an electric vehicle? EV owners consume a massive amount of power overnight. A plan with discounted or free nighttime electricity can drastically lower your charging costs.
• Do you have a pool? Pool pumps use a lot of energy. If you can program your pump to run during off-peak hours, you might save money with a time-based plan.
• Are you on a strict budget? Look for a fixed-rate plan with no minimum usage charges and no bill credit requirements. Simplicity is the easiest way to ensure predictable bills.

Step 6: Look Beyond the Average Price

It's tempting to simply sort a list of plans by the lowest average price and click enroll. But choosing an electricity company is about more than just the rate. You're entering a relationship with a company that you'll rely on every single day.

When you compare electricity plans, evaluate the provider's reputation and customer experience. A company that offers a rate that seems too good to be true might make up for it with poor customer support, hidden fees or a frustrating digital experience.

Look for a provider that offers effortless convenience. Do they have a highly rated mobile app? Can you easily track your daily energy usage to prevent end-of-month surprises? Do they offer flexible payment options and 24/7 customer service?

As the #1 choice for electricity in Texas, more homes and businesses trust TXU Energy for straightforward, affordable electricity plans than any other provider. We've been proud to power millions of Texans since 2001. Our customers have come to expect innovative plans that help them save around the way they live, best-in-class usage tools and 24/7, 5-star service.

Final Takeaway: Finding the Best Electricity Plan for You

Choosing electricity in Texas should empower you, not confuse you. By understanding your own energy habits, decoding the Electricity Facts Label and looking past promotional rates, you can confidently navigate the deregulated market.

Most importantly, choose an energy provider that values your business and supports you with innovative tools and outstanding service. Ready to compare your options? Explore TXU Energy electricity plans today and experience the difference of a provider that truly puts you first.