Last updated: March 11, 2026
About 85% of Texans can choose from competing retail providers in cities like Houston, Dallas, and Corpus Christi. Municipal utilities in Austin, San Antonio, and El Paso remain regulated with no provider choice. Your actual rate depends on plan type (fixed vs. variable), contract length, and usage level.
Average Electricity Costs in Texas
According to the U.S. Energy Information Administration (EIA Electric Power Monthly, data through December 2025), the average residential electricity rate in Texas is approximately 15–16¢ per kilowatt-hour — below the U.S. average of roughly 17–18¢/kWh. Rates vary by TDU service territory; see the breakdown below.
But here's what matters more than the average: what YOU pay depends on:
- Where you live (Houston vs. Dallas vs. Corpus Christi)
- How much electricity you use each month
- Which plan type you choose (fixed, variable, or indexed)
- Contract length and hidden fees
At first glance, Texas electricity rates may appear competitive compared to those in many other states. In recent years, average residential prices have typically fallen in the mid-teens (¢/kWh), though actual rates vary by utility service area, retail electricity provider, and plan structure.
While the per-kWh price in Texas is often comparable to—or modestly lower than—the U.S. average, total monthly electricity bills can still be relatively high. This is largely because Texas households tend to use more electricity than homes in most other states, especially during long summer months when air conditioning is used heavily.
Higher electricity consumption means that even small differences in price can translate into larger monthly bills. Many Texas homes use significantly more kilowatt-hours per month than the national average, which can result in average bills that match or exceed the U.S. average despite competitive per-kWh pricing.
Electricity costs also vary widely depending on home size, construction, and usage habits. Apartments and smaller homes generally experience lower monthly bills, while larger single-family homes—particularly those with extensive air conditioning use—can see substantially higher costs during peak summer months. As a result, individual household bills may fall well below or well above the statewide average depending on energy use.
Compare Your Electricity Usage
Electricity bills can feel unpredictable — especially when prices change or usage spikes. This estimator provides context by comparing your usage with statewide residential electricity averages.
There’s no signup and no plan comparisons — just a simple way to understand how your electricity usage compares with typical households in your state.
Estimates use statewide average residential electricity prices published by the U.S. Energy Information Administration (EIA).
Electricity Bill Estimator
Source: U.S. Energy Information Administration (EIA)
Seasonality also plays a major role. In spring and fall, when temperatures are mild, typical bills may sit below the annual average as air conditioners and heaters aren’t running constantly. In contrast, summer bills often spike, with many households experiencing monthly costs above $220–$280 during the hottest months of June through August, especially if multiple air-conditioning units are in use.
Finally, it’s worth noting that while Texas’s deregulated market helps keep the competitive per-kWh rates relatively moderate, other factors like state delivery fees, extreme weather demand, and periodic rate adjustments by utilities can still contribute to higher total monthly costs.
For many families, electricity is one of the largest monthly household expenses, and understanding both the price per kWh and how much electricity you actually use is key to budgeting effectively.
Why Texas Electricity Rates Have Been Rising
Texas electricity used to be significantly cheaper than the national average. That gap has narrowed — here's why rates have increased and what to expect in 2026.
| Year | TX Avg Rate | US Avg Rate | TX vs. US |
|---|---|---|---|
| 2020 | ~11.6¢/kWh | ~13.2¢/kWh | 12% below |
| 2022 | ~13.5¢/kWh | ~15.9¢/kWh | 15% below |
| 2024 | ~14.7¢/kWh | ~17.1¢/kWh | 14% below |
| 2025 | ~15.4¢/kWh | ~17.5¢/kWh | 12% below |
| 2026 (est.) | 15–16¢/kWh | 17–18¢/kWh | ~12% below |
Source: EIA Electric Power Monthly. 2026 figure estimated based on 2025 data and market projections. Treat as a range, not a guarantee.
What's driving the increases:
Natural gas prices — About 42% of Texas electricity comes from gas-fired plants. Natural gas prices have risen in early 2026 and are forecast to average higher in 2026 than 2024.
Data center demand — Texas added roughly 13 TWh of new data center electricity demand between 2019 and 2023. Continued AI infrastructure build-out is putting sustained upward pressure on wholesale prices.
Grid hardening costs — Following the 2021 winter storm (Uri), ERCOT required significant weatherization investments from generators and utilities. Those costs pass through to ratepayers via TDU delivery charges.
Growing renewables (partial offset) — Wind and solar now supply nearly 40% of Texas electricity, which pushes wholesale prices down during high-generation periods. But gas peaker plants still set the marginal price during peak demand hours, which drives the rate spikes that matter most to your bill.
The bottom line: Texas rates are still below the national average and are expected to stay that way. But the era of sub-12¢/kWh plans is gone. Locking in a competitive fixed-rate plan during spring — when demand and rates are seasonally lowest — remains the most reliable way to manage costs.
Why Texas Bills Can Be High... Even With Competitive Rates
Even though Texas often has per-kWh rates lower than the national average, total bills can still be high due to:
- High consumption levels, especially from air conditioning during long hot periods
- Larger average home sizes which require more cooling and full-house electrical use
- Seasonal rate fluctuations common in deregulated plans
- Delivery and utility fees that are part of the total cost
Together, these factors mean that a bill that looks inexpensive on a rate basis can still add up to a high monthly cost, particularly for homes that run A/C most of the year or have many occupants.
What Is ERCOT and How Does the Texas Power Grid Work?
Most states in the U.S. are connected to large, multi-state power grids. Texas is different.
The majority of electricity in Texas is managed by a single organization called the Electric Reliability Council of Texas, commonly known as ERCOT.
You've probably heard of ERCOT—especially after the 2021 winter storm. Here's what it actually is:
ERCOT = Electric Reliability Council of Texas
ERCOT operates the power grid for about 90% of the state’s population, including most major cities and deregulated areas. At a high level, ERCOT’s job is to make sure electricity supply and demand stay balanced in real time. It does not generate electricity, sell electricity plans, or send bills to consumers. Instead, it acts as the central coordinator that keeps the lights on across most of Texas.
What ERCOT Does:
- Balances electricity supply and demand in real-time across the grid
- Coordinates when power plants generate electricity
- Runs the wholesale electricity market where providers buy power
- Maintains grid reliability during normal operations and emergencies
What ERCOT Does NOT Do:
- Own power plants or transmission lines
- Set your retail electricity rates
- Choose your electricity provider
- Send you bills
- Respond to outages at your home
Can You Choose Your Electricity Provider in Texas?
How to check: Your eligibility is determined by your exact address, not just your city or ZIP code. Enter your ZIP on any comparison site to see if you have choice.
Not all parts of Texas are deregulated, and this is one of the most common sources of confusion.
An estimated 85% of Texans live in areas where they can choose their electricity provider. These areas include most major metro regions such as Houston, Dallas–Fort Worth, Corpus Christi, and large parts of the Rio Grande Valley.
However, some cities operate their own municipal utilities and opted out of deregulation.
Cities in Texas Without Retail Electricity Choice
If you live in one of the following cities, electricity remains regulated by the local utility:
- Austin
- San Antonio
- El Paso
Residents in these areas receive electricity directly from the city-run utility and cannot shop among competing providers.
This distinction matters because many people search for answers like “is electricity deregulated in my Texas city?” or “can I choose my electricity provider in Texas?” - and the answer depends entirely on location.
What's the Difference Between Utilities and Electricity Providers in Texas?
This is where people get confused. Let's clear it up:
Your Utility Company (TDU = Transmission & Distribution Utility)
Examples: Oncor, CenterPoint, AEP Texas, Texas-New Mexico Power
What they do:
- Own and maintain power lines, poles, and meters
- Deliver electricity to your home
- Respond to power outages
- Read your meter and report usage
What they charge:
- Delivery fees (regulated by the state)
- Infrastructure maintenance costs
- These fees appear on your bill regardless of which provider you choose
Important: Your utility company is based on where you live. You cannot change it.
Your Retail Electricity Provider (REP)
Examples: Reliant, TXU, Direct Energy, Gexa, dozens of others
What they do:
- Buy electricity from the wholesale market
- Create pricing plans and contracts
- Send you your monthly bill
- Handle customer service
What they charge:
- Energy supply rates (this is what you shop for)
- Base fees (sometimes)
- Early termination fees (if you break your contract)
Important: You CAN change your provider anytime (though you might pay a cancellation fee if you're under contract).
Types of Electricity Plans in Texas (What They Actually Mean for Your Bill)
Texas offers several electricity plan types, each designed to meet different household needs, budgets, and risk preferences. Understanding how these plans work can help you avoid unexpected charges and choose an option that aligns with your usage habits.
Rather than focusing only on advertised rates, it’s important to understand how pricing behaves over time and what commitments each plan requires. Understanding how pricing behaves across seasons helps you shop at the right moment. In Texas, rates are typically lowest in spring (April–May) and fall (October), and highest during peak summer and winter months. Shopping during shoulder seasons and locking in a fixed-rate contract before summer is one of the most reliable ways to reduce your annual electricity cost.
Fixed-Rate Electricity Plans
How it works: You lock in a set price per kWh for your entire contract (typically 6, 12, 24, or 36 months).
Fixed-rate electricity plans provide a consistent price per kilowatt-hour for the duration of your contract. This means your energy rate does not change even if market prices fluctuate due to seasonal demand or fuel costs.
These plans are commonly chosen by households that value predictable monthly bills and long-term stability. Contract lengths typically range from six months to several years, which can help protect against sudden rate increases during high-demand periods like summer.
However, fixed-rate plans often include early termination fees if you cancel before the contract ends. Reviewing contract terms before enrolling can help prevent surprises.
Best for:
- People who want predictable bills
- Homeowners staying put for a while
- Anyone who hates surprises
Watch out for:
- Early termination fees ($100-$300 if you cancel early)
- Bill credits that only apply at specific usage levels
- "Teaser rates" that only look good at 1,000 or 2,000 kWh usage
Variable-Rate Electricity Plans
How it works: Your rate changes month-to-month based on wholesale market prices, demand, and other factors.
Variable-rate electricity plans do not lock in a set price. Instead, the rate you pay can change from month to month based on market conditions, demand, and supply factors.
This flexibility can be appealing for short-term living situations or for those who prefer not to commit to a long contract. However, variable pricing can lead to higher bills during periods of increased demand, particularly during extreme weather.
Because pricing can fluctuate without notice, variable-rate plans generally require closer monitoring and may not be ideal for households seeking stable monthly expenses.
Best for:
- Short-term situations (moving soon, between contracts)
- People who monitor their bills closely
- Those comfortable with month-to-month risk
Watch out for:
- Summer spikes (rates can double or triple during heat waves)
- No long-term price protection
- Bills that jump unexpectedly when wholesale prices surge
Indexed Plans
How it works: Your rate is tied to a specific index (usually natural gas prices or wholesale electricity markets) with a set formula.
Best for:
- Advanced users who understand energy markets
- People willing to track market conditions
Watch out for:
- Complex pricing formulas
- Can spike even higher than variable plans during extreme conditions
Renewable & Green Energy Plans
How it works: Electricity comes from (or is offset by) renewable sources like wind or solar through Renewable Energy Certificates (RECs).
Best for:
- Environmentally conscious consumers
- Anyone wanting to support clean energy growth
Texas is a national leader in wind energy production. Wind and solar combined provided nearly 40% of Texas electricity during 2025, according to EIA data — up significantly from under 20% a decade ago. Renewable plans are often priced competitively with conventional plans because of this abundant supply.
Pricing: Renewable plans in Texas are often competitively priced and may not cost significantly more than traditional plans.
What Actually Affects Your Electricity Bill in Texas
Let's talk about the real drivers of your monthly cost:
1. How Much Electricity You Use
This is the biggest factor—and the one you have the most control over.
What drives usage:
- Air conditioning (the #1 culprit in Texas)
- Home size and insulation quality
- Number of occupants
- Appliance efficiency
- Thermostat settings
Average Texas household usage:
- Spring/Fall: 800-1,100 kWh/month
- Summer: 1,500-2,200 kWh/month
- Winter: 1,000-1,400 kWh/month
2. Your Electricity Rate Structure
Not all "14 cents per kWh" plans are created equal.
Watch out for:
- Bill credits that only apply at exact usage levels (use 999 kWh? No credit. Use 1,500 kWh? No credit. Only get it at exactly 1,000 kWh.)
- Tiered pricing where rates jump at certain usage thresholds
- Base fees that aren't included in advertised rates
Pro tip: Always check the Electricity Facts Label (EFL) to see your actual cost at YOUR usage level, not just the advertised "500 kWh" or "2,000 kWh" rate.
3. Delivery Fees (TDU Charges)
These are set by your utility company and regulated by the state. They cover:
- Infrastructure maintenance
- Meter reading
- Grid reliability
You cannot avoid these fees. They're the same regardless of which provider you choose and typically add 3-5 cents per kWh to your total cost.
4. Seasonal Demand
Wholesale electricity prices fluctuate based on:
- Weather (extreme heat or cold)
- Natural gas prices (Texas relies heavily on gas-powered plants)
- Grid demand vs. supply
In 2025, Texas saw fewer extreme price spikes than in prior years, attributed in part to milder summer temperatures and increased renewable generation on the ERCOT grid. Whether 2026 follows the same pattern depends on summer weather conditions and natural gas prices, which have risen in early 2026.
5. Contract Timing
When you sign up matters.
Best times to shop:
- Spring (March-May): Demand drops, rates often fall
- Fall (October-November): Pre-winter pricing can be competitive
Worst time to shop:
During extreme weather events: Wholesale prices spike
Mid-summer (July-August): Demand peaks, rates rise