Texas Zip Codes With Electricity Choice
How Many Texas Electric Companies Operate Within One Zip Code?
If you live in an energy deregulated area of Texas, there are plenty of electricity companies that can sell energy plans in your zip code. As of August 2022, the Public Utility Commission of Texas (PUCT) has an official list of 136 Retail Electric Providers (REP) in the Lone Star State. Considering that each REP may offer more than one electricity plan, there are dozens of options in the market. However, the specific electricity plans available depend on your location in Texas. To narrow down your options and save time, you can compare electricity plans by ZIP code.
It’s important to know that there are actually two types of energy companies who are involved in your power bills:
- Retail Electricity Provider (REP): The company selling you kilowatt-hours, or electricity plan.
- Transmission and Distribution Utility (TDU): The company in charge of power lines, utility poles, transformers and other grid components in your area. They charge a fixed monthly fee, plus a variable fee per kWh.
Technically there is no limit to the number of REPs who can sell electricity plans in a single zip code (as long as they meet PUCT requirements). However, there is only one TDU in any given location. Regardless of your electric provider, the TDU adds their delivery charge per kilowatt-hour.
In other words, you can choose among many REPs to provide the kilowatt-hours you consume, but there is only one TDU in charge of the local grid. This means you can choose the kilowatt-hour price, but the delivery cost per kWh is set by your local TDU.
How Often Do Electric Rates Change Within My Zip Code?
Electricity prices are adjusted based on the type of plan you have, regardless of your zip code:
- If you have a variable-rate or indexed-rate plan, electricity prices are adjusted each month based on the wholesale market.
- Indexed-rate plans are also known as market-rate plans.
- If you have a fixed-rate plan, your electricity provider will “freeze” your kilowatt-hour price for the entire duration of the contract. However, there are penalties if you switch to another plan before the contract ends.
Prepaid electricity plans can have either fixed rates or variable rates, depending on the specific plan you choose.
TDU charges in your area are updated twice per year in March and September, regardless of your electricity plan. If you have a fixed-rate plan when this happens, the kWh price charged by the retail electric provider is not changed, but the TDU charge is updated.
Why Do Electric Rates Vary By Zip Code in Texas?
Electricity prices depend on multiple factors such as the combination of power plants found in your region, and the operation and maintenance costs of the local grid. Electricity prices are also affected by supply and demand, just like the price of other products and services. Since these conditions change depending on your zip code, electricity prices also vary.
In the case of Texas, the ERCOT grid is divided into five service territories, and each territory is assigned to a different electric utility provider. Local delivery charges vary depending on your utility company.
For example, you can compare the same electricity plan at two different zip codes in Dallas and Houston:
- Oncor is the TDU in Dallas, while CenterPoint Energy is the TDU in Houston.
- The electricity plan for the Dallas ZIP code will show TDU charges from Oncor, while the plan for the Houston ZIP code will show TDU charges from CenterPoint (even if all other charges are identical in both plans).
Who Determines the Electricity Costs For My Zip Code?
The Texas power sector is a free market, which means electricity providers can set kilowatt-hour prices at their discretion. In the case of market-rate plans, electricity prices are determined with a pricing formula and a publicly available index.
- Since retail electric providers compete for customers, those who charge excessively high rates are likely to go out of business.
- However, many REPs manage to sell electricity plans that seem cheap at first, but you end up paying much more due to hidden charges or misleading conditions.
Also consider that electricity prices are affected by supply and demand. This means you can expect higher rates during summer, when homes and businesses use their air conditioners at full power. Electricity prices can also spike during extreme cold weather, since buildings rely on their space heating systems – this happened in February 2021 during Winter Storm Uri.
As mentioned above, TDU charges are updated in March and September, with approval from the Public Utility Commission of Texas. Your retail electricity provider has no control over TDU charges.
The PUCT has a useful database with all the electricity charges approved in Texas, along with a list of Electricity Facts Labels (EFL).
How Does My Neighbor Have a Cheaper Electric Rate Than Me?
There are many possible explanations for this. Maybe your neighbors signed up for a fixed-rate electricity plan when kilowatt-hour prices were low, and recent price hikes have not affected their bills because the plan is still active.
Another possibility is that your neighbor could be constantly looking for the cheapest rates and switching over. However, this strategy is only possible with variable-rate and indexed-rate plans, since fixed-rate plans have penalties if you switch before the contract ends. You can save on power bills by constantly shopping around for cheaper plans, but this takes time.
You could also be paying higher rates due to misleading terms and conditions in your current electricity plan. There are plans that offer very low rates, but only if you exceed a certain kWh consumption each month, with much higher rates below this level.
If you have a free weekends or free nights plan, check the kWh prices charged during the non-free hours. These plans give you free electricity during certain schedules, but they charge above-average rates the rest of the time. If you have one of these plans and your consumption during paid hours is high, you should consider switching.
Do I Live in a Zip Code With Electricity Choice?
Quick Electricity has a map of Texas showing the regions covered by the deregulated market, along with a list of cities where energy choice is available.
You can also use our ZIP code search tool to compare electricity plans available in your location.
Complete List of Texas Zip Codes and Cities With Deregulated Electricity
If you live in a Texas zip code with electricity choice, it may be possible to save on power bills simply by choosing a more favorable energy plan. Quick Electricity offers residential and commercial electricity service in the following Texas postal codes: