Comparing Texas Electricity Plans: Fixed, Variable, and Time-of-Use
The Right Plan Makes a Huge Difference
Both in how much you pay and how predictable your monthly bill is. In Texas’s deregulated market, most providers offer fixed-rate, variable-rate, or time-of-use plans. Each plan type has its own pricing structure, flexibility, and level of risk. Understanding the differences helps you choose a plan that fits your usage patterns and budget.
Why Plan Type Matters
It’s not just about picking a provider with the lowest rate—it’s about how that rate behaves over time and how it fits your lifestyle. Some plans offer predictable pricing, others change with the market, and some reward you for shifting your usage to certain times of day.
Your usage habits, living situation, and comfort level with price changes all factor into which plan is the best fit. Choosing the wrong plan can lead to higher bills, while the right one can offer long-term savings and fewer surprises.
Fixed-Rate Plans
What It Means
With a fixed-rate plan, your price per kilowatt-hour (kWh) stays the same for the entire contract period. Whether electricity prices rise or fall in the broader market, your rate is locked in. That means your cost per unit of electricity doesn’t change, even if your overall usage goes up or down.
Good For…
Families with steady electricity usage
Homeowners or renters staying put for at least a year
Anyone who wants a predictable rate and fewer billing surprises
Things to Consider…
Contracts usually range from 6 to 36 months. Choose a term that fits your situation.
Fixed-rate does not mean fixed bill—your total bill still changes based on how much electricity you use.
These plans may include monthly base charges, which add to your cost regardless of usage.
Some include minimum usage requirements. Falling below the threshold could trigger a fee or reduce a bill credit.
Fixed-rate plans provide cost stability but require a close look at the full terms. Always review the Electricity Facts Label (EFL) to understand how the plan is structured.
Variable-Rate Plans
What It Means
Variable-rate plans do not lock in your electricity rate. Instead, your price per kWh can go up or down each month, depending on the market and the provider’s pricing model. These plans are often month-to-month, which gives you more flexibility to cancel or switch without a long-term contract.
Good For…
Short-term renters or people in transition
Customers who want to avoid early termination fees
People who understand electricity market trends and are comfortable with some risk
Things to Consider…
Rates can rise sharply during periods of high demand, such as summer heat waves or winter storms.
There’s no guarantee that future rates will remain low, even if the current one looks appealing.
Providers are required to notify you before raising the rate, but that notice may come close to your billing cycle.
If you are watching your usage closely and are willing to monitor market trends, a variable-rate plan may offer short-term savings. But if you prefer predictability, this type may not be a good long-term fit.
Time-of-Use Plans
What It Means
Time-of-use plans charge different rates depending on when you use electricity. These plans often divide the day into peak, mid-peak, and off-peak hours. Some also offer promotional features like free nights or weekends.
The idea is to encourage customers to use electricity during times when demand on the grid is lower.
Good For…
Households with flexible schedules
People who are often home during off-peak hours
Electric vehicle owners who charge overnight
Homes with smart thermostats or programmable appliances
Things to Consider…
If most of your usage occurs during peak pricing hours, your bill may be higher than expected.
These plans require a smart meter that tracks usage in 15-minute intervals. Most TDSPs in Texas have already installed them.
The pricing structure may be more complex. It's important to know when your household uses the most energy before signing up.
For time-of-use plans to work in your favor, you need to understand your household’s usage patterns and be willing to shift habits if necessary.
Don't overpay for electricity.
Side-by-side Comparison
Plan Type | Rate Predictability | Contract Required | Flexibility | Best For | Watch Out For |
Fixed-Rate | High | Yes | Low | Long-term budgeting | Fees, usage minimums, auto-renewal |
Variable-Rate | Low | No | High | Short-term use, flexibility | Monthly rate changes, market exposure |
Time-of-Use | Medium | Sometimes | Medium | Off-peak users, EV owners | Peak pricing, complex rate structure |
Make the Plan Work for You
The plan type is just one part of the decision. Make sure to also review:
Base charges
Usage-based pricing tiers
Contract terms and fees
Renewable energy content
Customer reviews and billing clarity
All of these pieces combine to determine how well a plan will fit your life.
