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Texas electricity plan traps
Texas allows plan designs that reward some usage levels and punish others. None of them is illegal; each must be disclosed on the Electricity Facts Label (16 TAC §25.475, PUCT retail rules). The catch is that the label shows only three usage levels.
Bill credits: the cliff
A bill credit knocks a fixed amount off the bill when usage falls inside a range, for example $50 at 1,000 kWh or more. Miss it by one kWh and the whole credit disappears.
| Monthly use | Plan A: 9.5¢ + $9.95 base | Plan B: 11.0¢, $50 credit at 1,000+ kWh |
|---|---|---|
| 500 kWh | $95.85 (19.2¢) | $93.40 (18.7¢) |
| 999 kWh | $177.52 (17.8¢) | $182.55 (18.3¢) |
| 1,000 kWh | $177.68 (17.8¢) | $132.73 (13.3¢) |
| 2,000 kWh | $341.36 (17.1¢) | $311.41 (15.6¢) |
Made-up plans for illustration, Oncor delivery charges as published by retail providers for October 4, 2026 (Discount Power: TDSP delivery charges, retail provider). Plan B wins on all three EFL lines but loses by $5 at 999 kWh.
Texas usage swings with the seasons. If your spring and fall months fall below the credit, those months can cost more than a plain plan. Test both plans at your lowest month.
Minimum-usage fees
The reverse of a credit: a fee added when usage is under a set level. The rule doesn't mention them. It does require the EFL to list every fee and say whether it's in the average prices, and the averages to include all recurring charges (16 TAC §25.475, PUCT retail rules). Small homes, apartments and homes with solar are the ones that pay them.
Free nights and weekends
Time-of-use plans charge nothing in a set window and more the rest of the time. The PUCT's advice: shifting usage into the free hours is what makes them pay, and "if you do not shift your usage, your bill may actually increase" (PUCT: electricity plans). In 2024 the Dallas Morning News found off-window prices as high as 21–29¢ per kWh on such plans, against roughly 15–17¢ for typical fixed plans (Dallas Morning News: free nights plans, 2024). Air conditioning on a summer afternoon is the hardest load to shift.
Variable-rate plans
A variable price can change by whatever method the provider chooses. For homes it must be month-to-month, the provider must publish a year of its price history, and a month-to-month plan can't have a cancellation fee (16 TAC §25.475, PUCT retail rules).
When a fixed contract ends
A fixed-rate provider must send at least three expiration notices in the last third of the contract. The last must arrive at least 30 days before it ends (15 days for contracts of four months or less). If you do nothing, you roll onto a month-to-month plan you can leave at any time with no fee, and its EFL comes with the notice (16 TAC §25.475, PUCT retail rules). Those default plans are often priced higher, so put the end date on your calendar.
Early termination fees
- The rule sets no dollar cap, but the fee must be on the EFL (PUCT §25.475 rule text, PDF).
- No fee if you move and give a forwarding address (16 TAC §25.475, PUCT retail rules).
- No fee in the 14 days before the contract's end date, or within 14 days of a notice that the provider is changing your contract (16 TAC §25.475, PUCT retail rules).
Switching and canceling
- Switching providers is free, except a possible charge for an out-of-cycle meter read when you pick your own switch date without a smart meter (16 TAC §25.474, switching).
- You can cancel a switch, without a fee, within three federal business days of getting the Terms of Service. A move-in has no such right (16 TAC §25.474, switching).
- Providers can't use your credit score to set the price of plans of 12 months or less (PUCT §25.475 rule text, PDF).
- A deposit can't be more than the greater of one-fifth of a year's estimated bills or two months' estimated bills, and it comes back after 12 on-time payments. Customers 65 or older who aren't behind, and certified family-violence victims, don't need one (16 TAC §25.478, deposits). Prepaid plans can't require a deposit (16 TAC §25.498, prepaid).
Who can't choose
About 85% of Texans can choose a provider (ERCOT Grid Insights: retail market, Nov 2025). City-owned utilities and electric co-ops decide for themselves whether to join the market; most, including Austin Energy and CPS Energy, haven't (Tex. Util. Code §40.051; Tex. Util. Code §41.051; ERCOT Grid Insights: retail market, Nov 2025). Areas served by Entergy, Southwestern Public Service, El Paso Electric and SWEPCO also have no choice (PUCT: municipal utilities and co-ops). If that's you, the savings guide still applies: ways to lower your bill.
More on your electric bill
- How to read an Electricity Facts Label
- Delivery charges by utility
- Ways to lower your electric bill
- Help paying your electric bill
- Plan comparison calculator
Updated October 29, 2026. General information, not legal or financial advice. Rules are quoted from the Public Utility Commission of Texas rules as published; your plan's own Electricity Facts Label and Terms of Service govern your contract.