Fixed vs variable rate electricity in Texas
In Texas, a fixed rate product has a term of at least three months and the same price every billing period, except for changes in utility delivery charges, ERCOT or Texas RE fees, or new laws. A variable price product can change price by a method the provider sets; for homes it can only be month-to-month, so it cannot carry an early termination fee, and the provider must publish a one-year price history.
The two kinds of plans Texas allows for homes
Every Texas plan's terms of service and Electricity Facts Label (EFL) must say whether it is a "fixed rate product" or a "variable price product" (16 TAC 25.475(c)(2)(D), (g)(2)). Those two labels have legal definitions in 16 TAC 25.475(b), effective 01/06/2022.
| Fixed rate product | Variable price product | |
|---|---|---|
| Definition | Term of at least 3 months; same price each billing period of the term | Price may vary by a method the provider sets |
| Contract length for homes | 3 months or longer | Month-to-month only |
| Early termination fee | May apply; the EFL must disclose it | Not allowed (month-to-month) |
| What can change the price | Only the listed exceptions below | The provider's method, as the EFL describes |
| Extra disclosure | Bill shows allowed price changes | One-year price history on the website and by toll-free phone |
| Rule | 25.475(b)(5) | 25.475(b)(7), (b)(11), (c)(2)(G) |
"Price" here means all recurring charges, including ancillary services, but not sales taxes or the gross receipts tax reimbursement (16 TAC 25.475(b)(8)).
What can still change on a fixed plan
Under 16 TAC 25.475(b)(5), a fixed price may move from the disclosed amount solely to reflect:
- Actual changes in TDU (delivery) charges from your wires utility.
- Changes to ERCOT or Texas Regional Entity administrative fees charged to loads.
- Changes from federal, state or local laws that impose new or modified fees or costs on the provider that are beyond its control.
It cannot move for changes in ancillary service charges unless the PUCT expressly designates a specific type as beyond the provider's control for existing contracts. During the term, the provider may not change the price (other than as above) or the length of the contract (16 TAC 25.475(d)(1)(A)). When an allowed change happens, each bill must show it on a separate line or carry a conspicuous notice that the amount may include price changes allowed by law or regulatory actions (16 TAC 25.475(d)(2)(B)).
The provider can change other terms of a fixed contract with 14 days' written notice, and if you do not accept them, you can leave with no termination penalty within 14 days of the notice (16 TAC 25.475(d)(3), (d)(4)(E)). Marketing a plan as "fixed" when it does not meet this definition is prohibited (16 TAC 25.475(c)(1)(A)(i)).
What a variable plan must tell you
- The EFL notice. The EFL must say in bold that the price shown is the first billing cycle's price and that it may change afterward, either by up to a stated percentage or at the provider's sole discretion (16 TAC 25.475(g)(2)(E)).
- Price history. The provider must publish the current price and, for residential customers, a one-year price history (or the history since launch) on its website and through a toll-free number, and may not rename a plan to avoid showing it (16 TAC 25.475(c)(2)(G)).
- Next month's price. Each residential bill must tell you how to find the price that will apply on your next bill (16 TAC 25.475(d)(2)(C)).
- No exit fee. For homes a variable plan can only be month-to-month, and month-to-month contracts may not contain a termination fee (16 TAC 25.475(b)(7), (b)(11)).
When a fixed contract ends: month-to-month by default
For residential contracts entered into on or after September 1, 2021, the provider must send at least three written expiration notices during the last third of the contract (16 TAC 25.475(a), (e)(1)(A)). Each bill must show the expiration date in bold, underlined type (16 TAC 25.479(c)(6)). If you choose nothing, you move to the default renewal product named in your contract, which must be month-to-month and cancelable at any time without a fee, and whose price may vary between billing cycles (16 TAC 25.475(c)(3)(D), (e)(2)(A)). Power to Choose warns the month-to-month default price will likely be much higher.
If your fixed contract has a termination fee, no fee applies in the 14 days before the expiration date (16 TAC 25.475(e)(2)(C)(ii)). If the provider did not send proper notice, it must keep serving you at the fixed-rate terms until it does (16 TAC 25.475(e)(1)(C)).
Indexed plans are banned for homes
An indexed product follows a pricing formula tied to public indices (16 TAC 25.475(b)(6)). Providers, aggregators and brokers may not offer a wholesale indexed product (a direct pass-through of ERCOT real-time prices) to residential customers on or after September 1, 2021, or any indexed product on or after February 1, 2022 (16 TAC 25.475(c)(3)(F)).
How to compare them
- Open each plan's EFL and confirm the product type in its pricing section. See how to read an Electricity Facts Label.
- For a fixed plan, note the term, the expiration rules, and the early termination fee.
- For a variable plan, look up the one-year price history before you sign, not just the first-month price.
- Enter your own monthly kWh and each plan's charges in the true-cost calculator. The EFL averages are shown only at 500, 1,000 and 2,000 kWh (16 TAC 25.475(g)(2)(C)), so your real price per kWh can differ.
Common questions
Can my fixed rate go up during the contract?
Only for the reasons in the rule: actual changes in utility delivery (TDU) charges, changes in ERCOT or Texas Regional Entity administrative fees charged to loads, or new federal, state or local laws or fees beyond the provider's control. The provider cannot change your price for any other reason, or change the length of the contract, during the term.
Do variable rate plans have cancellation fees?
No. For residential customers a variable price product can only be month-to-month, and a month-to-month contract may not contain a termination fee or penalty.
How do I see what a variable plan charged in the past?
The provider must publish the current price and a one-year price history (or the full history if the plan is newer) on its website and through a toll-free number, and the plan's EFL must say how to get it.
What happens when my fixed contract ends?
If you do not choose a new plan, you move to the provider's default renewal product, which must be month-to-month and cancelable at any time without a fee. Its price can change from one billing cycle to the next.
Can I still get an indexed or wholesale plan for my home?
No. Providers may not offer wholesale indexed products to residential customers on or after September 1, 2021, or indexed products on or after February 1, 2022.
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