Fixed vs. Variable Electricity Plans in Texas: Which Should You Choose in 2026?

Quick Answer:

Choosing between fixed and variable electricity plans in Texas affects how much you pay and when. For most Texas residents, the answer is fixed-rate — and the gap between the two plan types is wider than most comparison guides admit. Fixed-rate plans lock in your price (currently 9–16¢/kWh) for up to 36 months, protecting you from the market swings that pushed some variable-rate customers to bills over $7,000 during Winter Storm Uri in February 2021. Variable-rate plans run 15–20¢/kWh right now — higher than most fixed options — with the only real upside being month-to-month flexibility and no early termination fee.

Choose fixed if you own your home or plan to stay 12+ months. Choose variable only if you’re moving within 3–6 months or need short-term coverage while you shop.

This guide breaks down both options, explains the real numbers, and helps you figure out which one actually makes sense for your situation. For background on how Texas’s deregulated market works, see our Texas electricity deregulation guide.

Key Points (for reference)

Fixed-rate plans:

• Rate locked for contract term — typically 12, 24, or 36 months
• Current range: 9–16¢/kWh (2026, varies by contract length and provider)
• Come with early termination fees: typically $100–$300 if you exit early
• Best for: homeowners, long-term renters, anyone who wants predictable bills

Variable-rate plans:

• Rate resets monthly based on wholesale market prices and seasonal demand
• No fixed contract, no ETF — switch or cancel anytime
• Current range: 15–20¢/kWh (elevated in February 2026 due to Winter Storm Fern recovery)
• Best for: short-term residents, renters moving within 6 months

Bottom line: Fixed plans are typically cheaper in normal conditions and dramatically cheaper during peak demand seasons. Variable plans trade price risk for flexibility.

What Is a Fixed-Rate Electricity Plan?

A fixed-rate plan locks in your price per kilowatt-hour (kWh) for the length of your contract. Whether wholesale electricity prices spike during a July heat wave or drop in mild spring weather, your rate stays the same until your contract expires.

Contract lengths typically run:

• 6 months
• 12 months (most popular — 61% of Texas shoppers chose this in 2025)
• 24 months
• 36 months

Once you sign up, that rate doesn’t change when summer heat drives demand through the roof or when market prices fall. Texas’s deregulated electricity market is what makes this choice available to most Texans in the first place — about 85% of the state can shop for competing providers.

The upsides of fixed-rate plans

Predictable bills. You know exactly what you’re paying per kWh every month. Budgeting becomes easier when your electricity rate doesn’t move. If you use 1,000 kWh in July and 1,000 kWh in November, your per-kWh cost is identical.

Protection from price spikes. Texas summers are brutal. When everyone cranks their AC and electricity demand skyrockets, wholesale prices can jump sharply. Fixed-rate customers are insulated from that volatility. The rate you locked in 6 months ago still applies even if market prices doubled.

Most Texans choose them for good reason. About 75% of Texas residential customers chose contracts of 12 months or less in 2025, with fixed-rate plans being the most popular option by far.

The downsides of fixed-rate plans

You might pay a slight premium upfront. Providers build in a buffer against future price increases, so fixed rates are sometimes slightly higher than current variable rates when market conditions are stable. You’re paying for price stability, essentially.

Early termination fees apply. If you move out of state, switch providers mid-contract, or decide you want a different plan, most fixed-rate contracts charge an ETF — typically $100–$300. Always check the Electricity Facts Label (EFL) before signing.

You can’t benefit if prices drop. If wholesale electricity costs fall halfway through your 24-month contract, you’re still paying your locked rate. In practice, most Texans prefer stability over the chance to save a few dollars during mild months.

Real numbers: what fixed rates look like in 2026

• Competitive 12-month fixed plans: 11–13¢/kWh (energy supply charge, as of early 2026)
• Cheapest available promotional plans: 8.70¢/kWh (select providers, 12-month fixed)
• Texas average including delivery charges: 15.84¢/kWh
• National average: 18.07¢/kWh

Texas rates are about 12% below the U.S. average, which is one reason fixed-rate plans here remain attractive. See our Texas electricity rates guide for a full breakdown by city and usage level.

What Is a Variable-Rate Electricity Plan?

A variable-rate plan doesn’t lock in your price. Your rate changes month to month based on market conditions, wholesale electricity costs, and your provider’s pricing decisions.

Most variable plans are month-to-month with no long-term contract, which means you can switch providers anytime without paying termination fees.

The upsides of variable-rate plans

Complete flexibility. No contract means no ETF. If you find a better deal next month, you can switch. If you’re moving in three months and don’t want to commit long-term, variable plans make sense.

Potential for lower prices in mild seasons. When wholesale electricity costs drop — usually during spring and fall when demand is low — some savings can pass through to your monthly rate. You might pay 10¢/kWh in April and 12¢ in May under the right conditions.

Good for short-term situations. If you’re renting temporarily, waiting for a home purchase to close, or unsure how long you’ll be at an address, variable rates let you avoid locking in a contract you might not finish.

The downsides of variable-rate plans

Your bill is unpredictable. Your rate can swing significantly month to month. One month you might pay 11¢/kWh. The next month, during a heat wave, you could pay 18¢ or more.

Summer gets expensive fast. Texas summers drive massive electricity demand. When everyone’s running AC, wholesale prices spike — and variable-rate customers feel it immediately. A 1,200 kWh summer month at 18¢/kWh costs $216 in energy charges alone, compared to $132 at a locked-in 11¢ rate. That’s an $84 difference on a single month — around $200–$250 extra over a full summer.

No protection from market disruptions. During Winter Storm Uri in February 2021, some variable-rate customers on wholesale-indexed plans saw bills spike to $5,000–$9,000 for a single month. Texas HB 16 (passed after Uri) banned those extreme wholesale-indexed plans, but standard variable plans still expose you to meaningful rate increases during any extreme weather event. Winter Storm Fern in February 2026 pushed variable rates 3–5¢/kWh higher than normal for several weeks. Fixed-rate customers paid their normal bill.

Rates are trending up long-term. Market analysts estimate Texas rates increased about 30% from 2020 to 2025, with projections of another potential 29% increase by 2030 due to infrastructure investment. Variable-rate customers ride those increases directly.

Fixed vs. Variable: Side-by-Side

Which Plan Is Actually Better?

For most Texas residents, fixed-rate wins — not because variable plans are inherently bad, but because:

1. Variable plans are currently more expensive than fixed in 2026 (15–20¢ vs. 9–16¢)
2. Texas has extreme weather events that turn variable-rate risk into real dollar losses
3. 75% of Texas shoppers already vote with their wallets and choose fixed

Here’s how to match your situation to the right plan.

Choose fixed-rate if:

You want predictable monthly bills. Stability matters more than the chance to save a few dollars when market prices dip in April.

You’re staying put for at least 12 months. You plan to live at your current address for at least one full year.

You’re risk-averse. The possibility of a surprise $300 electricity bill in July due to market conditions stresses you out.

You’re on a fixed income or tight budget. Knowing your electricity cost in advance helps you plan every other expense. See our guide to lowering electricity costs for additional strategies.

You’re a Texas homeowner. With Texas summer AC costs regularly pushing monthly usage past 1,500 kWh, locking in your rate before summer is one of the highest-value moves you can make each year.

Choose variable-rate if:

You need short-term coverage. You’re moving in the next 3–6 months and don’t want to commit to a contract you might not finish. If you’re moving within your provider’s service area, ask first — many fixed-plan providers will transfer your contract without an ETF.

You’re between contracts and actively shopping. Variable plans work as a bridge while you compare new fixed-rate offers. Don’t stay on variable longer than necessary.

You can monitor your bill closely and switch fast. Variable plans reward people who watch rates and move the moment prices start climbing. Most people don’t — and they end up paying more.

2026 Texas Electricity Market Update

As of 2026, Texas electricity rates are elevated following Winter Storm Fern, which hit the state earlier this month.

Current Rate Snapshot (2026):

• Fixed-rate plans: 9–16¢/kWh depending on contract length and provider
• Variable-rate plans: 15–20¢/kWh (currently elevated due to storm recovery)
• Texas average including delivery: 14–16¢/kWh (15–24% below the U.S. average of 17.78¢)
• Cheapest available: 8.70¢/kWh (promotional 12-month fixed plans)

What’s affecting rates right now:

Winter Storm Fern recovery: The February storm caused temporary demand spikes, pushing variable rates 3–5¢ higher than normal. Fixed-rate customers were unaffected.

Natural gas prices: Henry Hub natural gas is projected at $4.00/MMBtu for 2026, up from record lows in 2024. Since gas fuels roughly 43% of Texas generation, this pushes pricing higher.

Forward market pricing (good news): Wholesale power for 2026–2027 is currently trading lower than 2025 levels, which means longer-term fixed contracts signed now could lock in favorable rates before summer demand hits.

Renewable energy growth: Wind and solar provided nearly 40% of Texas power in 2025, helping suppress wholesale prices during peak sun and wind hours.

Bottom line for 2026 shoppers: Now is a good time to lock in a 12–36 month fixed contract while forward prices are lower. Variable rates are currently above normal — avoid them if you can.

When to Shop for Electricity in Texas (Seasonal Timing Guide)

Timing matters. Texas electricity rates follow predictable seasonal patterns, and shopping at the right time can save you 2–4¢/kWh on your locked rate.

Best times to shop

Spring (March–May): Lowest rates of the year. Mild weather means low AC and heating demand, and wholesale prices reflect it. Target: lock in a 12–24 month fixed-rate contract. Spring 2026 rates could reach 9–11¢/kWh for competitive 12-month plans.

Fall (September–November): Second-lowest rates. Cooling season has ended and heating hasn’t started. Good window if your contract expires in fall. October–November typically runs 1–2¢/kWh cheaper than summer rates.

Worst times to shop

Summer (June–August): Highest rates of the year. Peak AC demand drives wholesale prices up significantly. August bills average $237/month for a typical Texas home at 1,537 kWh. Do not let your contract expire in July or August without a plan.

Winter (December–February): Rates are variable. Heating demand increases, and winter storm risk is real. Winter Storm Fern (February 2026) drove variable rates up 20–30% temporarily. If your contract expires in winter, shop 45 days early.

Strategic contract length planning

The contract expiration trap is real: if you sign a 9-month contract in October 2025, it expires in July 2026 — peak summer when rates spike. If you sign a 12-month contract in October 2025, it expires in October 2026 — another good shopping window.

Pro tip: Match your contract length so it expires during spring or fall. Use our guide to finding your contract end date if you’re not sure when your current plan expires.

Real-World Example: Same Usage, Different Plans

Say you use 1,200 kWh per month — typical for a medium-sized Texas home with AC.

Scenario: June 2026 (summer heat wave)

Fixed-rate plan (locked at 12¢/kWh):

• Energy charges: 1,200 kWh × $0.12 = $144
• Total with delivery (~$50): ~$194

Variable-rate plan (market spikes to 17¢/kWh that month):

• Energy charges: 1,200 kWh × $0.17 = $204
• Total with delivery (~$50): ~$254

Difference: $60 more on the variable plan for one month.

Multiply that over a three-month summer (June–August) at elevated rates and you’re looking at $150–$200 extra just from rate volatility — enough to easily offset whatever you saved on spring variable rates.

The ETF Trap (And How to Avoid It)

Early termination fees catch people off guard because they’re not always displayed prominently during sign-up.

• Typical ETF range: $100–$300 flat fee, or $10–$20 per remaining month of contract
• Where to find it: Your Electricity Facts Label (EFL) — every Texas REP must provide one
• When ETF is waived: If you’re moving outside your provider’s service area, most providers waive the ETF. Always get this in writing before canceling.
• ETF break-even math: If your locked rate is 14¢ and the market is now 10¢, a $150 ETF pays for itself in about 3 months at 1,200 kWh/month. Beyond that, switching wins.

The key mistake is signing a 24-month contract when you’re uncertain about your plans. If there’s any real chance you might move, stay with 12-month terms — the rate premium for shorter contracts is usually only 1–2¢/kWh, which doesn’t outweigh ETF risk.

How to Choose an Electricity Plan in Texas: Step by Step

Step 1: Check your past usage

Look at your last 12 months of electricity bills. How many kWh did you use each month? If you don’t have past bills, estimate by home size:

• Small apartment (500–800 sq ft): 600–800 kWh/month
• Medium home (1,200–1,800 sq ft): 1,000–1,200 kWh/month
• Large home (2,500+ sq ft): 1,500–2,000+ kWh/month

Step 2: Decide on contract length based on your timeline

• Moving in less than 6 months → variable or 3–6 month fixed
• Staying 6–12 months → 12-month fixed (most common, best balance)
• Staying 1–2+ years → 24-month fixed (locks in longer, sometimes slightly cheaper per kWh)

Step 3: Read the Electricity Facts Label carefully

Every plan in Texas must provide an EFL showing price per kWh at 500, 1,000, and 2,000 kWh, all fees, and contract terms.

Critical: Look at the rate for your expected usage level, not just the advertised rate. A plan might show 10¢/kWh at 1,000 kWh but charge 14¢/kWh at 1,200 kWh due to tiered pricing or bill credits that only apply at specific usage thresholds.

Step 4: Compare multiple plans

Texas has 60+ retail electricity providers each offering dozens of plans. Comparison tools let you filter by contract length, fixed vs. variable, renewable percentage, and provider ratings.

If you’re in Houston, see our Houston electricity rates guide for city-specific provider options. Dallas residents can check our Dallas electricity guide.

Step 5: Watch the renewal date

This is where most Texans lose money. When a fixed-rate contract expires, most providers automatically roll you onto a variable rate — often 15–20¢/kWh or more. Set a calendar reminder 30–45 days before your contract ends. Use our contract end date guide if you’re not sure when yours expires. Shop for a new plan during that window rather than accepting the auto-renewal offer.

To understand the full switching process, see our how to switch electricity providers guide.

Common Mistakes to Avoid

Choosing based on the advertised rate only. A plan advertised at “9.9¢/kWh” might only hit that rate if you use exactly 1,000 kWh. Use 800 kWh or 1,300 kWh and the effective rate can jump to 13–14¢ due to bill credits or tiered pricing. Always check the EFL at your actual expected usage level.

Ignoring early termination fees. Sign a 24-month plan at a great rate, get a job transfer 8 months later, and you owe $200. If there’s any chance you might move, choose 12-month or shorter.

Letting your contract auto-renew. Your 12¢/kWh contract expires and you forget to shop. The provider rolls you to a 16¢/kWh variable rate. Over a year at 1,200 kWh/month, that’s an extra $576. Set reminders. Shop 30–45 days before expiration.

Picking variable “just to try it.” Variable plans aren’t starter plans. They’re designed for specific short-term situations. If you’re new to Texas electricity shopping, default to a 12-month fixed-rate plan. It’s the safe, statistically correct choice.

Ignoring base charges. Some plans have low per-kWh rates but include a $9–$15/month base charge regardless of usage. Low-usage households (under 700 kWh/month) often pay less on plans with slightly higher per-kWh rates but no base charge. The EFL shows all fees — read it fully.

Frequently Asked Questions

Can I switch from variable to fixed mid-month? Yes. If you’re on a variable plan (no contract), you can enroll in a new fixed plan anytime. The switch typically takes effect within 1–2 billing cycles.

What happens if I move during a fixed-rate contract? If you’re moving outside of Texas or to an area not served by your current provider, you can usually cancel without paying the ETF. If you’re moving within your provider’s service area, many providers will transfer your plan to your new address. Always confirm this before canceling.

Are fixed rates more expensive than variable rates? Currently no — fixed rates (9–16¢/kWh) are actually lower than the prevailing variable rate (15–20¢/kWh) in February 2026. In normal market conditions, fixed rates are sometimes 1–2¢ higher than variable introductory rates, but that premium disappears when summer demand hits.

Can providers change my fixed rate mid-contract? No. Your rate is guaranteed for the contract term. The only exceptions are changes to utility delivery charges (set by the TDU, not your REP) and rare regulatory changes — neither of which affects your energy supply rate.

Is a 36-month contract worth it for a lower rate? Only if you’re certain you’ll stay put. The rate savings on 36-month vs. 12-month contracts are often just 1–2¢/kWh — not worth it if there’s any chance you’ll move and owe a termination fee.

What is an Electricity Facts Label (EFL)? The EFL is a standardized disclosure document every Texas REP must provide for each plan. It shows price per kWh at 500, 1,000, and 2,000 kWh of usage, all fees and charges, contract length, and early termination terms. Always read it before signing up.

Did Texas ban variable electricity plans after Uri? Not entirely. Texas HB 16 (passed 2021) banned wholesale-indexed residential plans — the type that caused $5,000–$9,000 bills during Uri. Standard variable-rate plans are still available and still carry meaningful market risk during extreme weather events.

Where to Compare Texas Electricity Plans

When you’re ready to shop, use Power to Choose (the official Texas PUC comparison site at powertochoose.org) or a licensed comparison marketplace. These tools show plans available in your ZIP code filtered by type, contract length, renewable percentage, and total monthly cost at your usage level.

The Bottom Line

Fixed-rate plans give you stability, predictability, and — in the current 2026 market — lower rates than variable alternatives. You pay the same rate for 6–36 months, protected from market volatility, summer spikes, and winter storm surprises. This is the right choice for the large majority of Texas residents.

Variable-rate plans give you flexibility and no long-term commitment. They make sense for short-term renters and people in housing transition. They do not make sense as a default choice for anyone planning to stay put — the combination of higher current rates and Texas weather risk makes them the more expensive option in all but the mildest market conditions.

Most Texans already know this: 75% choose fixed-rate plans, specifically 12-month contracts, because they balance price protection with a reasonable commitment. Unless you have a specific reason to need flexibility, a 12-month fixed-rate plan is the right starting point.

The three moves that save you the most money: compare plans before signing up, read the EFL at your actual usage level, and set a reminder to shop 30–45 days before your contract expires.

Data sources: U.S. Energy Information Administration (EIA), ERCOT, ElectricityPlans.com 2025 Texas shopping data, TEPRI Energy Affordability Study, Compare Power.