choosing an electricity plan

Find the Best Electricity Plan for your Texas Home

Texas has a deregulated electric sector, which means you are free to choose among many retail electricity providers, unless you are served by a municipal utility or an electric cooperative. It can be tempting to simply purchase energy from the provider who lists the lowest price, but keep in mind there are contract conditions to review. For example, there are utility companies that offer very attractive prices, but only if your monthly consumption is above a specified value and if you agree to purchase energy from them for a minimum period.

If you live in Houston, the Dallas-Forth Worth metroplex or any one of the hundreds of energy deregulated cities in Texas, Quick Electricity can help you find the electricity provider that best suits your needs, simplifying the selection process and ensuring there are no surprises after you sign a contract.

The Three Main Types of Electricity Rates

When comparing retail electricity providers in Dallas, the greater DFW metroplex or Houston, you will notice there are three main types of contracts: fixed rate, variable rate, and indexed or market rate. By understanding the difference between them, you can choose the option that better suits your needs.

When negotiating a contract with an energy retailer, keep in mind that you are only determining the price of energy itself. In addition to the kWh price, you are charged transmission and distribution fees by the utility company operating the local grid, as well as fee adjustments due to state and federal regulations.

  • If you live in the Dallas-Forth Worth metroplex, the transmission and distribution infrastructure is operated by Oncor Electric Delivery.
  • On the other hand, the power grid in Houston is operated by Centerpoint Energy, but some portions of the Greater Houston metropolitan area are served by the Texas-New Mexico Power Company (TNMP).

Transmission, distribution and regulatory fees are a common denominator regardless of the type of service contract you choose, and they apply in both Houston and the DFW metroplex.

Fixed Rate Contract

With this type of service contract, you are charged a fixed electricity rate for its entire duration, and are only subject to the variation in transmission, distribution and regulatory fees. This type of contract offers predictability, but a penalty applies if you cancel the contract before the agreed term. If the market price of electricity drops below your negotiated price, you cannot switch to another provider unless you wait for the contract term to end or pay the penalty.

A fixed rate contract can be a smart choice if you have a high enough consumption to take advantage of the lowest electricity rates available in Houston or Dallas-Fort Worth. You can also carry out some quick web research on electricity price predictions; a fixed rate contract is great if prices are expected to increase, but may be counterproductive if there is a price decrease.

Variable Rate Contract

With this type of service contract, your electricity price is changed every month according to market price variations, or at the discretion of your retail electricity provider. As a result, the electricity price charged to you can increase or decrease unpredictably each month, but there is an advantage compared with fixed rate contracts: you are not required to purchase electricity for a minimum term and can switch to another provider without penalties.

A variable rate contract is recommended if you want the flexibility to switch your energy provider at any time, and are willing to search for the best electricity rates available in Houston or Dallas-Fort Worth on an ongoing basis.

Indexed or Market Rate Contract

The electricity price also varies in this type of service contract, but according to a predetermined formula and not the discretion of the retail electricity provider. For example, if the market price of electricity drops, a retail provider is not required to lower prices in a variable rate contract, but is under the legal obligation to do so in a market rate contract.

Like a fixed rate contract, a market rate contract requires you to purchase electricity for a minimum time period, and there is a penalty for early termination. This type of contract can be beneficial if electricity prices are expected to decrease, and you want to take advantage of this without having to switch providers frequently.

Which Type of Contract Offers the Lowest Cost of Electricity?

When choosing your electric service contract, the main elements to consider are flexibility and reliability. In theory, the lowest possible cost is achieved if you stay on variable rate contracts and switch to the lowest provider available every month, but this requires a constant search and a time commitment. Among the two contract arrangements that establish a minimum time period, the fixed rate contract delivers savings if the market price increases, and the indexed rate contract delivers savings if the market price decreases.

The following table summarizes the advantages of disadvantages of each contract type, so you can consider them when browsing through the available electric service options in Houston or Dallas-Fort Worth.

Contract Type Advantages Disadvantages
Fixed Rate 1) Predictable expenses.

2) No need to search for the best deals month by month.

3) You save on power bills if the market price increases.

1) Minimum time period.

2) Paying a penalty for early contract termination.

3) You lose on power bills if the market price decreases.

Variable Rate 1) No minimum time period.

2) Switch providers with no penalty.

3) You can save on power bills if you are constantly searching for the best deals.

1) Unpredictable energy price.

2) Rates can be adjusted at the provider’s discretion regardless of market price.

3) You can lose money if the provider increases its price suddenly and you forget to find another option.

Market or Indexed Rate 1) No need to search for the best deals month by month.

2) You are paying a fair electricity price that reflects the average for Houston or the DFW metroplex.

3) You save on power bills if the market price decreases.

1) Minimum time period, in most cases.

2) Paying a penalty for early contract termination.

3) You lose on power bills if the market price increases, and have no way to avoid an ongoing monthly increase.

In both Houston and Dallas-Fort Worth (DFW metroplex), you are allowed to choose among many electric service contracts, but provider selection is not as simple as purchasing from whoever offers the lowest price. There are many conditions and contract terms that you should not overlook to ensure you are getting the service contract that best suits your needs. Quick Electricity has joined forces with the most trusted energy providers in Texas to bring you low rate, straight forward plan choices. To shop electricity rates in deregulated Texas, visit our plans page or call 1 (888) 468-9188 for assistance.