How to Shop For Electricity in Texas

Choosing an electricity plan is a big decision that can either save you or cost you extra money. As Texas is a deregulated state, it’s worth taking extra time to compare the options and choose a plan that best fits your lifestyle.

Here are some things to look for when figuring out how to shop for electricity in Texas.

What is a Deregulated State?

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Deregulation refers to the removal of government stipulations surrounding power providers. In simple terms, it means that any power company is able to compete in an open market. This is different from regulated states, which often have few suppliers or a monopoly.

The benefit of deregulation is that it encourages competitive pricing and more power source options.

Choose an Energy Source

There are numerous energy source options to choose from in Texas, including nuclear, natural gas, coal, petroleum, hydro, and renewable sources. Depending on your location within Texas, your access to hydro or certain renewable sources may be limited.

First, choose an energy source that appeals to you. It’s worth considering renewable sources as they are both better for the environment and often come with green-initiative rebates. Likely, the most important factor will be your location and cost.

Understand Your Usage

Before you decide on an electricity plan in Texas, you should sit down and calculate your typical usage. This can be a challenge if you’re new to the area, haven’t lived on your own, or are changing home styles. For example, if you lived in an apartment before and are upgrading to a house, your usage will go up.

If you’re buying a home, request the electricity bills from the seller before making a decision. Take your habits and lifestyle into consideration. If you’re someone who acts mindfully about consumption, you might have more wiggle room when choosing a plan.

Compare Prices

Whether you’re selecting an energy provider for the first time or trying to switch to the lowest electricity rate, you need to do some price comparison shopping. When evaluating pricing, look beyond the price per 100kw. Consider things like rebates, the term length, penalties, and credit requirements.

It’s also worth looking at the more subtle features of the plan. For example, some plans will have fluctuating costs during peak hours or other variable pricing options. Don’t hesitate to ask questions about how your bill will be broken down and whether a quoted price is accurate before signing anything. Look for a provider who is happy to share those details and ask for recommendations and reviews.

Consider Your Term

Signing with an electricity provider is similar to getting a mortgage; you need to commit to a term that will impact your rates. This part of electricity shopping in Texas can get tricky. Generally speaking, you get lower pricing for longer commitments. A long contract is worth exploring if you plan on living in one place for years. Otherwise, the early cancel penalties aren’t worth the initial savings. 

It’s also important to consider whether your term comes with a fixed or variable rate. If you have a fixed rate, your electricity cost will remain the same for the duration of your term, whether the market goes up or down. A variable-rate allows you to take advantage of a cheap market but puts you at risk when prices rise. 

Remember to clarify the renewal process. Most energy providers will automatically renew you at the end of your term unless you follow the proper channels to cancel. When they do this, it’s rarely at the affordable rate at which you had signed up for. 

Choose the Right Plan

When you’ve compared all the variables, choose the plan that suits you. You will submit an application and receive a contract. This process can take a few weeks, so be proactive if you’re facing the end of a contract or moving into a new home.