The New Homeowner’s Guide to Texas Energy Rates and Plans

 


Becoming a homeowner in Texas comes with exciting new responsibilities—decorating your own space, building equity, and creating a place that truly feels like home. But with that excitement comes practical decisions too, and one of the first things you’ll need to tackle is setting up your electricity service.

If you're new to Texas—or just unfamiliar with how energy works here—you're in for a surprise. Texas operates one of the most deregulated energy markets in the United States. That means you have the power to choose your own electricity provider and plan. While this gives homeowners control and potential savings, it can also be confusing for first-timers.

This guide walks you through everything you need to know about Texas energy rates, providers, and how to make the best choice for your home.

What Makes Texas Different? Understanding Deregulation

Most states assign a single utility company to each area, and residents have no choice but to use them. Texas, however, changed that model when it deregulated much of its electricity market in 2002.

What this means for you:

  • You can shop around for electricity rates and plans from different companies.

  • Your utility company (the one maintaining power lines and responding to outages) is separate from your electricity provider (the one that sends you the bill).

  • You can switch providers if you find a better rate or service.

Not every part of Texas is deregulated. Cities like Austin and San Antonio operate through municipally owned utilities, but most of the state—especially in major metro areas like Dallas, Houston, and Plano—is deregulated.

Know Your Transmission Utility (TDU)

Even though you can choose your electricity provider, you can’t choose the utility company that delivers the power. This entity is called the Transmission and Distribution Utility (TDU), and they’re responsible for:

  • Maintaining poles and wires

  • Fixing outages

  • Reading meters

The TDU charges are standardized and appear on your monthly bill regardless of which electricity provider you use.

Major TDUs in Texas include:

  • Oncor – North and Central Texas, including Dallas and Fort Worth

  • CenterPoint Energy – Greater Houston area

  • AEP Texas – South and West Texas

  • Texas-New Mexico Power (TNMP) – Parts of North and West Texas

Types of Energy Plans Available

When shopping for electricity, you’ll come across a variety of plan types. Understanding each will help you make a smarter choice based on your home size, family habits, and monthly usage.

1. Fixed-Rate Plans

  • Lock in a rate per kilowatt-hour (kWh) for the duration of your contract (usually 12 to 36 months).

  • Best for stability and predictable monthly bills.

  • Ideal for homeowners planning to stay long-term.

2. Variable-Rate Plans

  • Rates can change monthly based on market conditions.

  • May offer flexibility but comes with the risk of rate spikes.

  • Suitable for short-term commitments or temporary living situations.

3. Indexed Plans

  • Rates are tied to a public pricing index.

  • Similar to variable plans but with a more defined structure.

  • Requires a better understanding of market trends.

4. Prepaid Electricity Plans

  • Pay in advance for electricity with no credit check or long-term contract.

  • Ideal for those with credit issues or those looking for budgeting control.

Estimate Your Usage

Electricity plans are often priced differently based on your average usage. To get the most accurate cost estimate, you need a sense of how much electricity your household will use monthly.

Average electricity usage in Texas:

  • 1-bedroom apartment: 500–800 kWh/month

  • Medium-size home: 1000–1500 kWh/month

  • Large home or family household: 2000+ kWh/month

If you're unsure, look at past utility bills (if available) or use online tools to calculate expected usage based on square footage and number of residents.

Compare Plans the Smart Way

Use Texas’s official, unbiased shopping platform:
👉 PowerToChoose.org

This website allows you to:

  • Compare rates across providers

  • Filter by plan type and usage level

  • View key terms like contract length, renewable content, and fees

Every plan will include an Electricity Facts Label (EFL)—this document is like a nutrition label for your energy service, showing exactly how the rate is calculated and what charges apply.

Watch for Hidden Fees

Sometimes, the lowest advertised rate isn't actually the cheapest once you account for fees. Here's what to watch out for:

  • Minimum usage fees: Some providers charge extra if your usage falls below a set threshold.

  • Base charges: A fixed monthly fee added regardless of usage.

  • Early termination fees: If you cancel your contract before it ends.

  • TDU charges: Delivery fees from the utility company (non-negotiable but should be disclosed).

Always read the EFL carefully and don’t hesitate to call the provider and ask questions.

Consider Renewable Energy Options

Texas is a leader in wind and solar power, and many electricity providers offer 100% renewable plans. These often come at a similar price to standard plans, especially in metro areas.

Benefits of renewable plans:

  • Lower carbon footprint

  • Support Texas’s clean energy economy

  • Peace of mind with no fossil fuel dependency

Even if you don’t have solar panels, you can still go green by choosing a provider with a high renewable energy percentage.

Sign Up and Set Activation Date

Once you've picked a plan, the sign-up process is fairly straightforward:

  • Choose a start date (allow at least 1–3 business days in advance).

  • Provide your address and personal ID (some providers may require a credit check).

  • Pay a deposit, if required (varies by provider and credit score).

Some companies offer same-day activation or waive the deposit based on your history or by using a letter of credit from your previous provider.


Monitor Your Bills and Usage

Once you're set up, keep track of your usage to ensure you’re staying within budget. Many providers offer:

  • Mobile apps to monitor usage in real-time

  • Auto-pay and paperless billing discounts

  • Energy-saving tips based on your consumption

Monitoring your account allows you to catch any billing errors and determine if a different plan might suit you better in the future.

Quick Tips for First-Time Homeowners

  • Bundle internet and electricity? Some companies offer incentives if you bundle utility services, though it’s rare in Texas for electricity.

  • Moving soon? Be careful about contract terms and early exit fees.

  • Check for promotions. Look for plans that offer bill credits, free weekends, or smart thermostat discounts.

Conclusion

As a new homeowner in Texas, setting up your electricity plan is more than just flipping a switch. It’s an opportunity to take control of your energy usage, manage your budget wisely, and make informed decisions for your household.

With deregulation, you’re empowered to choose what works best for your needs—whether it’s price stability, renewable energy, or flexible contracts. Take the time to compare, read the fine print, and understand your options. Your monthly bill—and your peace of mind—will thank you.

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