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Renewing Your Texas Electricity Contract

Updated: 04/28/2022

If you're among the 29 million folks living in Texas, once every 12 months (or 24 or 36, if you're on a longer contract) you have a unique opportunity: renewing your Texas electricity contract. While it may seem like a chore, researching your options and finding the best rate for your next electricity contract can save you hundreds, if not thousands, of dollars down the road.

Of course, you don't have to renew your electricity contract.

If you take no action when your initial contract comes to an end, your current electricity provider will typically (and happily!) transition you into a month-by-month plan with variable rates and no price protection.

If you are currently on a month-to-month plan with fluctuating rates, you can set up a fixed-rate contract today, and all the advice below applies to you as well.

Why is a Fixed-Rate Electricity Plan Better?

No matter where you live, the cost of electricity, like gas prices, is going to change from to time.

A fixed-rate electricity contract allows you to lock in a lower, predictable cost for electricity for a certain period of time, typically 12 months, though 24- and 36-month contracts are also available.

Shorter fixed-rate contracts of 3-, 6- or 9-month durations are also sometimes available. These plans may come in handy to tide your household over until a time of year when more affordable rates are usually offered. The best rates are typically offered from December through March or April when demand is lowest. Once the heat of summer kicks in, electricity rates often go up as A/C units increase demand across the state.

The alternative to a fixed-rate contract is a variable-rate plan. A variable-rate plan fluctuates with the current market price of electricity. Even if your house uses the same amount of electricity each month, your electricity bill will likely look different each month on a variable plan as your rate adjusts with the market. Why can that be risky?

Let history be a warning to you. Remember the harsh winter storm of February 2021 that debilitated many of Texas's energy grids and left thousands without power?

Some consumers who powered their houses as they normally would during this time saw "astronomical spikes" in their monthly electricity bill as a result of surge pricing during an emergency. One Dallas resident got a monthly bill for $16,75270 times what he normally paid.

A fixed-rate contract would have prevented that unexpected surge pricing. So, now that we have the importance of renewing your contract in perspective, what else does one need to know?

When do I renew my Texas electricity contract?

While you can renew your contract with your current electricity provider at any point, the last two weeks of your current contract are the best time to do so.

That's because, during this two-week window, you're able to switch electricity providers if you want to without paying any early termination fee, or ETF. If you switch providers any earlier, your current provider can charge you a fee for leaving your contract before your contract expires.

Per Texas law, electricity providers in Texas are required to send you a notice that your contract is expiring 30 days before it does so. Even so, your current provider will often start sending renewal offers even earlier than that. Keep in mind, however, that these offers may be far from the best electricity rates available. It's often in your best interest to wait until closer to your expiration date and shop around.

How do I find the best rate when renewing my contract?

There are plenty of useful resources out there to help you find the best rate for your next contract.

We highly recommend our own price comparison tool. Just enter your ZIP Code to find the best rates in your home area. You can be set up with a new Texas electricity provider offering the best rate for your household in a matter of minutes.

While your current provider is likely to make a number of sales pitches to you offering a variety of rates, honestly, the most affordable option is usually to switch.

That's because electricity providers, like magazine subscriptions and streaming servicers, want to lure in new customers with low introductory rates. Those great rates will often disappear, however, once your initial contract is up. At that point, the electricity providers are betting on your neglectfulness to make more money off you.

You can also visit our electricity rates comparison page for Texas. For reference's sake, the average Texas residential electricity rate is 12.24 cents per kWh as of April 2022.