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Understanding Energy Rates in Texas

Whether you’re new to the Texas energy market or looking to make a switch, there is a lot to learn about energy. When you’re researching energy rates and supply plans, you may come across industry terms you don’t recognize. If you’re stressing out about fixed-rate supply plans and variable-rate supply plans, don’t worry. This list will help answer your questions, and you will be ready to choose your electricity supply plan in no time.

Frequently asked questions about energy rates for your electricity supply in Texas

What is deregulation in Texas?

  • Under electricity deregulation, consumers in Texas must purchase electricity from a retail electricity provider (REP.) The increase in REPs creates competition for consumers and can drive electricity rates down. There are still some areas of Texas where electricity is regulated. If you are not sure if you live in a deregulated area, check your last electricity bill.


What is an energy supply rate?

  • Your energy rate is how much you pay for electricity per kWh. Energy rates vary from city to city and provider to provider and depend on a number of factors, so they can be difficult to compare. Be sure to research all of your options when you shop for energy rates. Ask whether the energy rate includes utility fees or is only for energy supply.


How do you determine a kWh?

  • A kilowatt is a standard for measuring electricity. One kilowatt equals 1,000 watts. A kWh is the number of kilowatts you use over time. According to the Energy Information Administration, the average U.S. residential customer uses about 1,100 kWh per month.

What are fixed-rate and variable-rate supply plans?

  • With a fixed-rate supply plan, the amount you pay per kWh stays constant throughout your contract. These plans offer predictability for consumers. With a variable-rate supply plan, the amount you pay per kWh can change during your contract based on market prices. If market prices decrease, consumers may benefit from a lower rate. However, if market prices increase, supply rates may increase as well.


What are indexed rates?

  • Indexed rates are based on a pricing formula tied to a publicly available index. The price per kWh can change each month, similar to a variable rate. Indexed plans may offer a cap on the rate, meaning the supply rate could go lower but will never go higher than the capped rate.


What are green energy plans and should I get one?

  • Some retail electric providers offer green energy plans that use renewable resources such as hydropower and wind power to generate electricity. After purchasing a green energy product, your provider will purchase renewable energy credits on your behalf to replace the traditional energy. While there is no requirement to sign up for a green energy plan, these plans offer many benefits. Green energy products help you reduce your carbon footprint and they create new jobs in the energy industry.


Do I still need my utility company?

  • Your utility company is still responsible for delivering your electricity. REPs work with utility companies to make sure consumers get their energy supply.


Who do I call if there is a power outage?

  • If you experience a power outage, contact your utility company.