How to Choose the Best Electricity Plan

Apr 15, 2022 | Energy Conservation

Texas is one of several states with a deregulated energy market. This means you can purchase electricity from a retail provider of your choice. In a regulated market, the local utility company or power cooperative is the only electricity service provider. There are no other options. Deregulated and regulated markets are the same in that all the power travels through one set of wires managed by one utility company in Texas, it’s the Public Utility Commission. But in a deregulated market, you have the freedom to select your electricity provider. Not only does this freedom result in lower rates, but also technological innovation and better customer service.

Shopping for an electricity plan in these deregulated markets can seem overwhelming. There are many competing providers to choose from, and each of them offers an array of different plans. It isn’t easy to know where to begin, how to decipher it all, or, most importantly, how to choose an electric plan that doesn’t result in you paying more than you have to for your monthly service. The best thing about having so many options is that there’s almost definitely a great plan and provider for you. This quick guide will tell you what you need to know to select a good plan for you.

What Is an Electricity Plan?

An electricity plan is the service agreement contract between a customer and a retail electricity provider for monthly at-home electricity service. It describes all the terms and details of the plan, including the price of the electricity — measured in kilowatt-hours (kWh) whether the rate is fixed or variable, the contract term length, and any service or cancellation fees. Electricity providers may also offer clean and renewable electricity produced from wind or solar. And some plans also offer value-adding features like perks, bonuses, and rewards programs.

6 Things You Need to Know to Choose the Best Electricity Plan

Shopping for an energy plan can seem intimidating. Although your electricity bill is based primarily on how much energy you use, there are other variables that affect it. We’re going to cover all the factors you need to consider when shopping for electricity service so that you can select the right plan for your lifestyle and a monthly bill that fits your budget. 

1. Your Needs

Since you’re purchasing electricity service for your household, it’s essential to have a relatively clear understanding of your needs. How many kWh do you use every month? How big is your home? How do your heating and cooling costs affect your electricity usage during the warmer and colder months? These are the essential pieces of information you need to know when selecting an electricity plan. Checking your old electricity bills is usually the quickest and easiest way to determine those numbers. But if you don’t have that information readily available, you can assume that the average home in Texas is around 2,500 square feet and uses just shy of 1,200 kWh per month, according to the Energy Information Administration. If your home is larger or you have a pool or some other extra amenity that ups your electricity usage, you’ll need to adjust your estimates.

The reason it’s beneficial to know your electricity needs is that your electricity bill is based on how much power you consume. And not every plan is the same in terms of how different tiers of electricity use are calculated. For example, some plans may have heavily advertised discounts that apply after the first 1,500 kWh. But if you only use 1,100 kWh per month, you won’t save money. Similarly, if you have a large home and use over 2,000 kWh every month, a plan that’s intended for the needs of a small apartment might result in a super-high bill. Of course, many of these situations have to do with variable-rate contracts, and and a fixed-rate contract can obviate such confusion, but we’ll get into that later.

2. How Long You Want Service

Electricity service is available in several contract lengths. Month-to-month electricity service is available, but you can typically get much better rates by signing up for a plan with a longer-term length. Six-, 12-, and 18-month terms are most common, and sometimes you’ll even see plans for 24 months or longer. What’s important, though, is what you need. If you’re shopping for electricity for the home that you own and have no foreseeable plans of leaving, you might be able to take advantage of a lower rate offered by a longer contract. Conversely, if your needs only extend six months, you don’t want to sign on for longer than necessary and end up on the hook for early termination fees.

Another factor to consider when deciding on a contract term is whether or not you like the retail electric provider in question enough to commit to a long-term arrangement. With a longstanding company like Energy Texas, who takes pride in their reputation for customer service and community involvement, you can rest easy knowing your customer experience is going to be incredible. But not every retail electricity provider offers that same level of experience or support. Keep this in mind before being swayed by a seemingly lower rate from an unknown company without a documented track record of success.

3. You Have the Option of Renewable Energy

If you’ve ever noticed the electricity-producing solar panels and wind farms that dot the countryside and wished that you could partake in the green energy revolution, your wish is about to come true. Deregulated energy markets result in a lot of innovation, both in technology and consumer choice. One of the best examples of convergence between the two is the amount of clean, green renewable energy that retail electricity providers can now offer their consumers. It’s a slight divergence from the state’s storied love affair with fossil fuels, but it also illustrates Texas’s embrace of renewable energy production.

If reducing your carbon footprint by using renewable energy is a priority to you, then all you need to do is sign up for a renewable plan from a company like Energy Texas, and you’re on board. Keep in mind that although our plans are 100% solar- and wind-based, other electricity providers may offer plans that are only partially green energy. Read the plan details carefully and ensure the fine print matches the headlines.

4. The Difference Between Fixed and Variable Rates

When you’re shopping for electricity, two terms you’ll see used a lot to describe energy rates are “fixed-rate” and “variable-rate.” Fixed rates are, well, fixed. They don’t change based on weather conditions, time of day, day of the week, or month of the year. The price per kilowatt-hour is the same no matter what. Variable-rate contracts are different in that the rates do change. Some offer free electricity during nights and weekends in exchange for a higher daytime rate. Others have rates that adjust with the market price of electricity. Again, the best way to make the right decision is to examine your needs.

If you’re a busy family who needs electricity on-demand and you can’t wait until after 9 pm to do your electricity-intensive chores, then a variable-rate electricity plan probably isn’t going to provide the savings it might seem. In those situations, a fixed-rate contract will likely be a much better match. Conversely, some single people with an apartment and a busy work schedule that keeps them away during the day actually do come out ahead with a variable-rate service contract that offers free nights or weekends. But if simple, straightforward, and surprise-free is your goal, then our advice is to choose a basic, fixed-rate electricity plan.

5. Read the Electricity Facts Label

One of the worst feelings is getting an electricity bill that’s higher than you anticipated or discovering that you’re obligated to pay fees you didn’t know applied. Many times, these situations can be avoided by reading the electricity facts label (EFL). The EFL is standard documentation that every electricity plan is required to have. It describes in clear language all the plan specifics, including the length of the contract, if the electricity is produced from renewable resources, and most importantly, all the billing details — including how much you’re going to be charged for electricity, how it’s calculated, and what other fees apply.

You should always examine the energy facts label for any electricity plan before you sign up. Make sure you understand what it says and pay special attention to the early termination fee — that’s where many people find themselves liable for an expensive charge. If you’re unclear about anything, contact the company’s customer support and ask. How they handle your inquiry will tell you everything you need to know. For an added pro tip, make entries in your calendar for the dates when your electricity plan will expire. Alerting yourself a month ahead of time will give you ample opportunity to find a new plan without unknowingly letting the old one lapse or automatically renew.

6. Switching to a New Provider Won’t Interrupt Your Service

Often, people don’t want to shop for a new electricity plan because they’re worried that some lapse between two providers could leave them sitting in the dark for a few days until the meters are aligned. This won’t happen. Moving to a new provider doesn’t interrupt your service, and you don’t even have to notify your previous provider of the switch. Simply sign on with the new provider of your choice, and they’ll take it from there. But, again, be sure you know the terms of your contract and whether or not any early termination fees apply. Sometimes it makes financial sense to pay the fee and move to a lower rate, and sometimes it makes sense to wait it out. Do what’s right for you.

Energy Texas Has an Electricity Plan That’s Right for You

Shopping for an energy plan in the deregulated Texas market isn’t hard when you know what to look for. Understanding your needs is key to choosing the electricity plan that best matches them. How much electricity do you use? Do you need the convenience of a fixed rate or are you in a unique situation that might allow you to play the variable-rate game? Then, think about how long you need service. If you’re staying put for at least two years, a long-term contract might provide a low rate in exchange for the commitment. But if you don’t know what’s happening next year, a six-month plan could be right for you. If renewable energy is a priority, keep an eye out for those options. And, finally, read and understand the EFL.

You’ll always have fair, reliable service with Energy Texas. We believe that bull is for the rodeo, not your electric bill! That means we treat our customers how we want to be treated, period. We offer fair, uncomplicated plans and helpful staff who are there when you need them. You can even earn awesome rewards like bill credits and gift cards just for paying your bill on time. How cool is that? So if you want reliable service at a fair rate from a company who puts you first, check out the plans Energy Texas has available in your area.

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