Shopping for electricity? It helps to have a basic understanding of the types of electricity plans so you can make the choice that best fits your home, your budget and all the ways you use energy. Let’s start by exploring the key differences between a fixed-rate and variable-rate electricity plan in Texas.

Understanding fixed-rate electricity plans in Texas

With a fixed-rate electricity plan, the price you pay per kilowatt hour (kWh) for electricity, also known as the “energy rate,” remains locked in every month. Typically, no matter how much electricity you use, you’ll pay a predetermined rate for the energy itself. Your overall monthly bill also includes fees from your utility company, often called your Transmission and Distribution Service Provider (TDSP), as well as regional administration fees. These TDSP fees and administration charges can change due to factors beyond your retail electricity provider’s (REP’s) control.

Benefits of a fixed-rate plan

Fixed-rate electricity plans offer stability and predictability in your monthly energy bills. By locking in an energy rate for the duration of your contract, you're shielded from the ups and downs of the energy market. It can be a smart choice for budget-conscious families or anyone who values peace of mind in their energy pricing.

Electricity demand and pricing in Texas are influenced by:

• The state’s rapid population growth
• Seasonal weather patterns
• Increased use of electricity in our lives

Considerations for fixed-rate plans

Choosing a fixed-rate plan means you’ll benefit from a locked-in energy rate. To ensure your price security, you’ll likely commit to a contract with your provider, typically 12 to 36 months in duration. Many such contracts come with cancellation fees. Be sure to consult your provider.

What is a variable-rate electricity plan?

Often referred to as month-to-month plans, variable-rate electricity plans are typically short-term agreements with no traditional cancellation fees. Each month, the energy charge used to calculate your bill can fluctuate, often by a defined percentage related to the previous month’s price.

Flexibility and volatility of variable-rate plans

Without a long-term contract, month-to-month plans can make it easy to switch electricity plans or providers. When electricity rates dip, variable-rate plans can also help customers save.

On the flip side, with the flexibility of variable-rate plans comes exposure to market volatility, because the monthly energy rate may be based on wholesale electricity costs. Without a locked-in energy rate, your monthly bill could change significantly with the rise and fall of energy prices, making it harder to budget for energy. It's a trade-off between flexibility and predictability.

How energy deregulation in Texas affects your choices

For most retail electricity customers in Texas, deciding between a fixed and variable rate is one of many factors that can impact their electricity plan choice. Why? One primary reason is the vast majority of Texas is a deregulated market.

In a regulated energy market, customers are usually provided a “one-size-fits-all” plan from their local utility company. This is the case in many states and regions across the country. In contrast, since Texas is deregulated, homeowners, renters and businesses customers have more freedom in their choices.

Retail electricity providers (REPs) in a deregulated energy market compete for your business. To appeal to different needs, competing providers offer a wide range of electricity-plan structures, energy rates, plan lengths, time-of-use options, and even special plan enhancements.

So in Texas, along with making the basic choice between a fixed and variable rate, you’ll have plenty of options when it comes to pinpointing a plan that best meets your needs.

Electricity plan options beyond fixed and variable

Choosing between a steady fixed-rate plan or a flexible month-to-month plan is a basic choice you’ll make when picking the electricity plan that fits you best. But the options and possibilities don’t stop there.

Prepaid electricity
Pay for your power in advance, with no need for a deposit or long-term contract.

Free electricity periods
These types of plans make it easy to save on the cost of electricity based on the time period electricity is being used. You’ll find plans with no charge on weekends or nights, or other variations.

Plans with bonuses
Look for plans with added-value perks like bill credits, gift cards, additional services, no-cost connected-home devices and even charitable contributions.

The impact of seasonality on electricity rates in Texas

Seasonal demand can impact electricity rates. Largely because of increases in air conditioning and furnace use, demand in Texas typically peaks in the warmest parts of summer and coolest parts of winter. A locked-in, fixed-rate plan can help mitigate pricing changes during periods of seasonal demand spikes. If you'd like to explore a variable-rate plan, prices during milder spring and fall months are likely to be less driven by spikes in demand.

The role of renewable energy in choosing your electricity plan

Many providers, including Reliant, offer plans that are powered by and support renewable energy generation sources like solar. You may also come across plans powered by wind energy.

In the case of a solar-powered plan choices there’s usually no need for rooftop panels or any other changes to your home’s electric system. It’s a fixed-rate plan, and you use power as normal, rain or shine, while you do your part to support a cleaner future. And since you won’t need to make any changes to your space, these types of electricity plans are ideal for both homeowners and renters.

Fixed-rate contract terms and cancelation fees

Choosing a fixed-rate electricity plan typically requires you to enter into a contract with a provider. You’ll commonly see 12- to 36-month terms for these agreements. This is also why fixed-rate electricity plans are sometimes referred to as “term” plans. And while month-to-month plans by nature don’t require a long contract, they often have their own unique agreement terms.

When it comes to transferring or canceling service, different restrictions apply based on your contact.

In general, in deregulated Texas, when you move to a new address, you can transfer your electricity service and not incur charges from your provider. However, you may be subject to a connection fee from the Transmission and Distribution Service Provider. Cancelling a plan early may lead to a cancelation fee, based on the specifics of your contract with your provider.

Electricity plan FAQs

If you’ve got questions about electricity plan choices, signing up and transferring or switching service, Reliant has answers.  Explore our FAQs for these topics and plenty more.

• How do I find electricity plans available to me?
• How long will it take my service to begin?
• How far in advance can I schedule service?
• Will I have to pay a deposit to begin service?

Making the best choice for you

Choosing the right electricity plan is about finding the balance that works for you—balancing your usage requirements, budget considerations and personal preferences. At Reliant, we're here to help you navigate these choices. Whether you're looking for stability, flexibility, or a way to support clean energy, we have a plan that fits.