If you live in Texas and you haven't shopped your electricity rate in the last year, there's a reasonable chance you're paying more than you should. Not slightly more — potentially a lot more. Here's why, and how to tell.
Texas Is Deregulated — Which Means Competition Should Work for You
Texas runs on ERCOT, the most competitive retail electricity market in the country. Hundreds of retail electric providers (REPs) compete for your business, which means rates fluctuate constantly and there are almost always better deals available than whatever you're currently on.
That competition is meaningless if you never take advantage of it. And most people don't.
The Renewal Trap
When your electricity contract ends, most providers automatically roll you onto a month-to-month or renewal plan. These rates are almost always higher than what they'd offer a new customer. Providers know that inertia is powerful — most people won't switch even when their rate quietly ticks up.
Some customers are paying renewal rates that are 20–40% higher than what they'd get by simply shopping around. If you can't remember when you last locked in a rate, that's a sign worth checking.
Variable Rates Are a Different Problem
Some plans advertise attractive introductory rates but are variable — meaning the provider can change your rate each month based on market conditions. During normal months this might feel fine. During a heat wave or cold snap, variable rates can spike dramatically. The summer of 2023 saw variable-rate customers in Texas paying two to three times what fixed-rate customers paid during peak demand weeks.
If your plan doesn't have a fixed rate with a defined contract term, you're exposed.
What “Average” Looks Like in Texas
The average residential electricity rate in Texas typically runs between 10 and 13 cents per kWh, depending on the season and market conditions. But averages are misleading. In a competitive market, well-shopped customers often lock in rates at the lower end of that range or below it, while inattentive customers end up at the high end or beyond.
Pull your most recent electric bill. Find the line that shows your energy charge in cents per kWh. If it's above 13 cents, you're almost certainly overpaying relative to what's available right now.
Hidden Rate Inflation: The Things You Might Not Notice
Beyond the per-kWh rate itself, some providers pad their pricing through base charges, minimum usage fees, and tiered structures that penalize average consumption. A plan advertised at 9.9 cents per kWh might include a $9.95 monthly base charge that effectively raises your rate when your usage is low. The electricity facts label (EFL) tells the true story — but most people never read it.
When comparing plans, the rate at your actual usage level — typically shown at 500, 1,000, and 2,000 kWh tiers on the EFL — is the number that matters.
Contract Timing Matters
Electricity rates in Texas follow supply and demand. Signing a contract in the spring or fall — when demand is lower and wholesale prices soften — typically yields better fixed rates than locking in during the peak of summer. If your contract happens to be expiring in July, it's worth shopping early or negotiating a short bridge term to renew in a cheaper window.
What to Do About It
The fix is straightforward: compare current rates against what you're paying. That means pulling live offers from multiple providers and reading the EFL for each. A broker does this work for you at no cost — they pull rates across the full market, show you options at your actual usage level, and handle the switch. The whole process takes minutes, not hours.
If your rate is competitive, you confirm that and move on. If it isn't, you switch and start saving immediately. Either way, you know where you stand.
The Bottom Line
Texas gives you the right to choose your electricity supplier. That right only has value if you use it. Rates in the market shift constantly — a deal that was competitive eighteen months ago may be well above market today. Checking takes minutes. Not checking can cost you hundreds of dollars a year.