Texas Electricity Prices: What to Know About Long vs. Short-Term Contracts and Where Rates Are Goin'

Texas Electricity Prices: What to Know About Long vs. Short-Term Contracts and Where Rates Are Goin'

Texas has one of the most unique and unpredictable electricity markets in the country. Between energy deregulation, wild weather, and big shifts in how we generate power, your electricity plan isn’t something to pick on autopilot. Should you lock in a long-term fixed rate or ride the waves with a short-term plan? Let’s break it down, y'all.

Fixed vs. Variable Electricity Plans: What’s the Best Bet?

Fixed-rate electricity contracts give you one steady price over the life of the plan, no matter how wild the market gets. It’s like the slow-and-steady pickup truck that never lets you down. If prices rise, you’re sittin’ pretty.

Variable or month-to-month plans, on the other hand, change with market prices. They can be cheaper when demand drops or during mild weather, but if a heatwave hits or natural gas spikes, your bill might go through the roof.

When to go fixed:

• Rates are expected to rise

• You want predictable monthly bills

• You're signing a lease or buying a home

When to go variable:

• Prices are falling or stable

• You like flexibility

• You're planning a short stay

Electricity Prices in Texas: The Backstory

Since Texas deregulated its energy market in 2002, prices have been anything but boring. Natural gas used to be the big price driver, especially after fracking brought prices way down in the 2010s.

But recent years have seen more ups than downs:

• 2021 Winter Storm Uri turned the grid upside down, sending wholesale prices as high as $9,000 per megawatt-hour.

• More renewables, like wind and solar, are coming online.

• Infrastructure upgrades are underway to make the grid stronger and more reliable.

Are Electricity Prices in Texas Going Up?

In a word: probably. ERCOT (that’s the folks who manage most of our power grid) expects demand to keep rising as more people move here and as electric vehicles take off. Here are the big influences:

Natural Gas

Still the main source of electricity in Texas. It’s affordable at times, but super sensitive to weather, global politics, and supply chains.

Renewables

Wind and solar are helping us rely less on fossil fuels, and that’s a good thing long-term. But it takes serious investment in grid upgrades to get that clean energy where it needs to go.

Texas Growth

We’re booming. More people means more power use. Combine that with inflation and supply chain issues, and costs for new infrastructure add up.

Wild Weather

Heatwaves. Polar vortexes. Hurricanes. Texas sees it all, and the more extreme the weather, the more it can spike prices.

Can Batteries Help Level Things Out?

Absolutely. Big battery storage projects are popping up all over Texas. These systems store extra power when demand is low and send it back when demand is high. That keeps prices more stable and helps us depend less on gas during crunch time.

Want more? Here's a deeper dive on Texas battery storage.

What Else Affects Prices?

Market Rules

Texas has a deregulated market, which gives you the power to choose your provider. That freedom also means more market volatility. State leaders are talking about new rules requiring energy reserves, which could boost reliability—but may cost more.

Federal & State Incentives

Programs like the Inflation Reduction Act offer funding and tax breaks for renewable projects. That’s good news for long-term price stability, even if the transition brings short-term costs.

Solar + Storage at Home

Thinking about rooftop solar or a battery system? You’re not just lowering your bill—you’re helping the whole grid by easing demand. Over time, more home systems could lead to lower prices for everyone.

What About the Grid?

ERCOT and other utilities are investing big bucks to weatherproof the grid, expand transmission lines, and connect more renewables. That work needs funding—and some of it comes from ratepayers like you.

What Can You Do to Save?

You don’t need to go off-grid to keep costs low:

• Install a smart thermostat to adjust temps when you’re away

• Upgrade to energy-efficient appliances like fridges and dishwashers

• Seal up leaks and boost insulation to keep A/C inside

• Consider solar or battery backup if it fits your budget

How Energy Texas Helps Texans Stay Ahead

At Energy Texas, we keep things simple and honest. We offer straightforward fixed-rate plans, so you don’t have to worry about market swings. Want to go green? Our 100% renewable plans are powered by Texas wind and solar.

We believe in plain talk, solid deals, and treating folks right. That’s how we do energy the Texan way. Want a fixed-rate plan you can trust? Check out our plans and see how Energy Texas can keep your bills steady.

FAQs

Should I choose a fixed or variable rate plan right now? If prices look like they’re going up, fixed-rate plans are your safest bet. They lock in a rate and help you budget better.

Are short-term contracts risky? They can be. You might save short-term, but if a price spike hits, you’ll feel it fast.

Will battery storage lower my bill? Over time, yes. It helps during peak hours when rates are highest, especially if paired with solar.

Is Texas moving toward more renewables? Yes—we’re already #1 in wind and making big moves in solar. The future’s looking cleaner and more stable.

How can I protect myself from extreme price spikes? Go with a fixed-rate plan, improve your home’s efficiency, and look into solar + storage options.