Learn more by reading below about some popular questions and answers regarding what electric rate plans to choose.
What Is A Texas Electricity Facts Label?
The Texas electricity facts label was put into place by Texas’ ERCOT agency to make a requirement for Texas Retail Electric Providers to provide a clear concise page that shows the electric rate along with important terms and conditions to the energy contract.
This makes it easy for a consumer to quickly determine if the electric rate is worth signing up for. This also allows the consumer to do the needed research without spending hours calling providers and reading through fine print in contracts.
This is the equivalent to a nutrition label on the back of a can of food. If you wanted to research electric rates on your own be sure to look at the facts label for the product being offered as it will tell you everything you will need to know including, the term, the electric rate, customer service charge, early termination fee, and where the energy is coming from.
What is the recommended Texas electric rate plan to get on?
A fixed rate is basically insurance in case Texas electric rates go up higher. A market rate (variable price) allows you to not be locked into an energy contract so you can get out at any time without incurring a penalty.
If you think you will be moving soon you should get on a market rate. Be careful which company you go with as some will really stick it to you when on a variable rate.
We recommend comparing multiple electric companies using our comparison chart.
Many energy companies have both fixed and variable electric rates and seem to have perfected the variable plan. The variable electricity price goes up and down with the market you would think. In reality a variable price can be raised and lowered at the discretion of the electric company. This means you may think your taking advantage of price dips rather then just being charged a premium for not being on contract but in reality the price can be raised regardless.
If the energy company has a variable electricity price and they expressly say there is a price ceiling then you have a product that limits your risk. A no term commitment variable electricity rate can allow you to take advantage of price dips and have a ceiling that stops the price from going up dramatically.
Fixed Rate Comparison with multiple companies
If you will be living in the same house or area for some time then you will definitely want to lock in on a term rate. By locking in you are keeping yourself contracted at a low electric rate for an extended period of time.
You will pay much less on your Texas electric by locking in then being on a month to month rate. 6 months and 12 month terms are the most popular. The longer you go out the more expensive the electric rate.
The reason the electric rate goes higher as you go out is because the electricity rate is based off of natural gas futures which happen to go up as you go out on a longer term or (futures contract). Compare multiple fixed rates from different companies to make sure the rate you are choosing is competitive.
For shorter electric rate terms be sure to choose at least a 3 month plan and have a beep set to go off on your phone to shop before expiration.
The 1 month plans are usually created with the express purpose of letting that rate expire only to go up on customers so the provider can reap the rewards of a rate with a much higher profit margin.
Don’t fall fool to such a plan. I would choose a 3 month plan if you want a short term option and set a reminder to go off on your phone a few days prior to the plan expiring so you can shop once again for a new rate without having to go off of a fixed rate onto a much higher rate.
What electric rate term is better?
As far as what term is better there is really no way to know. It would be like guessing on what the stock market will do. The government seems to think electric rates will go up in the long run at least that is what Energy.gov believes.
If it were me and I was not going anywhere soon I would actually sign up for the 24 month term but no longer then that.
The Texas ERCOT Energy council has implemented the nodal system in the next 2 years in order to try to reduce electric rates. Instead of there being only 5 regions in the managed grid there are over 200 nodal systems.
This would allow it so that smaller cities are not penalized with a higher electric rate because of Houston’s or Dallas’ congestion problems. If your town uses its energy in an efficient manner the Texas government believes you should be rewarded for it and I would have to agree.
What is the difference between a small Retail Electric Provider and a large one like TXU Energy?
The difference between a large electric provider and a small one is that the small one needs to establish itself in the marketplace. Many of the smaller electric companies have become established and have now been around for a decade or longer.
You will however not need to worry about loss or disconnection of electric service as it is just a paper transaction. You will still receive your electricity through the TDSP pole and wire company you have always used.
In Dallas this is (OncorTXU) and in Houston this is (Centerpoint Energy). You may not realize this but Oncor or Centerpoint actually passes through their charges on your electric bill and they are known as TDSP charges. These charges remain the same regardless of the Retail Electric Provider (REP) you choose. If the small electric company were to go bankrupt you would automatically be switched to the Provider Of Last Resort (POLR) and would never be without service.
This is a fail safe put into place by the Texas government and the ERCOT Texas grid management team also known as Electric Reliability Council Of Texas. If you are still uncomfortable using a smaller electric company even though they may have a lower electric rate you have other options.
There are very large electric companies that are just as old as TXU Energy and Reliant Energy that have come in from other states and started doing business in Texas when the state deregulated back in 2002.
Veteran Energy and Summer Energy are examples of smaller electric companies that have competed very well against TXU and Reliant. Your cheapest electric rate choice typically changes every few days so it doesn’t hurt to shop each and every time you need a new price. I hope this information helps you in making a solid choice on your electric service.