When Texas deregulated its energy sector in 2002, it led to increased competition among energy providers and the establishment of more than 140 electricity providers registered with the Public Utility Commission of Texas (PUCT). The goal of deregulation was to give customers access to lower electricity prices and improved service quality for consumers. However, it also led to a saturated market that required lots of research to sift through.
That’s why the PUCT established Power to Choose, a retail electricity marketplace and an educational shopping tool for Texans navigating the newly deregulated energy sector. It allows Texans to shop for electricity plans that suit their needs.
Over the years, Power to Choose has received mixed feedback for a variety of reasons, from confusing rate structures to deceptive plans that offered low rates but led to bill surprises later.
What Is Power To Choose Texas?
In the Lone Star State, your rights include having the power to choose your energy provider and electricity plan thanks to deregulation. But Power to Choose also refers to the government-run energy comparison website controlled by the Public Utility Commission of Texas.
It’s a free service that allows electric companies to market their energy plans to Texans. In short, it’s an energy comparison website run by the state.
Retail electric suppliers list their electricity plans, and Power to Choose ranks their offers based on pricing. But the site has severe credibility problems.
How Does Energy Deregulation Work in Texas?
The Texas deregulated market operates on a three-part system to deliver energy to residents and businesses. The three-part system consists of generators, transmission and distribution utilities (TDUs) and retail energy providers (REPs).
Generators create electricity using various sources, such as solar power, wind power, nuclear power and natural gas. The generator companies then sell that energy to electricity companies in wholesale auctions overseen by the PUCT and the Electric Reliability Council of Texas (ECROT). Meanwhile, the utility companies manage the power grid and transmit that energy to homes and businesses across the Lone Star State. Finally, REPs, also referred to as light companies, market energy plans and bill customers for their monthly electricity usage.
Utility companies maintain power lines, monitor meters and repair power outages as part of the deregulated market. If you experience a power outage, contact your TDU directly rather than your electricity provider.
Types of Electricity Plans Available
When researching an electric company and comparing Texas electricity rates, familiarizing yourself with the different types of electricity plans can help you make an informed decision about what’s best for your needs.
Fixed-Rate Plans
Fixed-rate energy plans feature electricity rates that stay the same for the duration of your contract, providing price protection when the market fluctuates. Overall, fixed-rate plans with no gimmicks provide the most predictable energy bills for Texas residents.
Fixed-rate plans often charge early termination fees (ETFs), also called cancellation charges, if you cancel your contract early. Refer to your electricity facts label (EFL) to find these penalty fees.
Variable-Rate Plans
Unlike fixed-rate plans, variable-rate plans feature electricity rates that change month-to-month. This plan type doesn’t typically require a deposit or charge cancellation fees because there’s no long-term contract, meaning you have the flexibility to switch plans at virtually any time.
However, the big risk with variable-rate plans is that prices can skyrocket with zero notice, making them unpredictable and complex. Overall, we don’t recommend variable-rate plans unless you’re specifically looking for a short-term solution for your energy needs.
Prepaid Plans
Prepaid plans, also called no-deposit electricity plans, don’t require a deposit or initial down payment for you to enroll in a plan or for your service to begin. This plan allows you to pay in advance for energy before you use it, giving you more control over your energy costs. However, your power company may cut off your service if your account balance hits $0, meaning this plan type requires constant monitoring of your account balance.
Prepaid plans may suit Texans who want to avoid a large upfront cost or who may not have the strongest credit history. Our research indicates that Payless Power is the best electric company for prepaid, no-deposit energy.
Green Energy Plans
Green energy plans, also known as renewable energy plans, offer energy derived from renewable resources, such as solar power or wind farms, which are growing fast in Texas.
Green energy is ideal for sustainability-minded residents who want to reduce their carbon dioxide (CO2) footprint and help the environment. And because green energy sources are growing in popularity, renewable energy plans are often as cheap as, if not cheaper than, electricity sourced from natural gas.
Where You Should Compare Electricity Providers
Power to Choose can certainly be a resource for finding an electricity provider and plan, but Home Energy Club is a great alternative and a more efficient tool overall. Since 2011, we’ve helped more than 10,000 customers choose the right plan for their energy needs, and we offer over 400 plans from some of the best energy companies in Texas.
We have a simple, three-step process for researching and comparing plans in your area:
- Enter your ZIP code
- Compare energy plans and providers
- Sign up in five minutes or less
Our sign-up process is quick, secure and takes mere minutes. We can even help you analyze your current energy plan and monthly energy costs to see if you can save money by switching plans or providers. All you have to do is email a recent energy bill to pricecheck@homeenergyclub.com.
Choosing Your Energy Provider
There are hundreds of light companies on the market, from major industry names, such as TXU Energy and Reliant Energy, to newer companies making waves, such as Rhythm Energy. Having all of these options can make it feel daunting to select the best provider for your unique energy needs. To demystify this shopping experience, we’ve put together some tips to help you find the best energy provider for your residence and energy use habits. With Home Energy Club, you can compare electricity suppliers, pick a plan and enroll online in minutes.
Evaluating Your Usage Patterns
It’s important to know your energy use habits before enrolling in any plan. To estimate your monthly energy patterns, you can refer to your past energy bills or check your data on Smart Meter Texas. We recommend reviewing your usage over a full year to account for seasonal variations in consumption. Reviewing past bills can help you identify your needs and habits, allowing you to pick an energy plan that aligns with how you use energy.
Considering Contract Length
Energy plan contracts can range from 9 months to 36 months. Some providers even offer 60-month contracts. We generally recommend 12-month fixed-rate plans to “lock in” your rate for a full year. However, if you’re planning on staying in your current residence long-term, you can potentially unlock further savings by signing up for a 24-month or 36-month plan. Some plans offer lower rates for longer contract terms. This also allows better price protection for longer.
Remember, though, that if you cancel your contract early, you may be responsible for ETFS, so a plan longer than 12 months may not be right for you. Read your EFL thoroughly before enrolling in a contract.
Avoiding Common Pitfalls
When researching energy plans, be mindful of gimmicky plans, such as time-of-use plans or bill credit plans. Some providers may advertise plans with ultra-low rates using bill credits, which is an account credit that applies when your usage meets a certain usage requirement, usually 1,000 or 2,000 kWh. If your usage falls below or rises beyond the required kilowatt-hour level, you won’t qualify for the bill credit, and your effective energy rate will skyrocket. Time-of-use plans offer discounted — or even free — rates during certain time windows, but these plans typically have higher rates during paid periods to offset the cheap or free periods.
To avoid confusion or overpaying, consider shopping for fixed-rate plans that offer low price variability no matter when you use your energy and have straightforward contracts that are simple to understand.
Frequently Asked Questions About Power to Choose
Is Power to Choose legit?
Yes, Power to Choose is a legitimate program in Texas. It’s the official online platform provided by the Public Utility Commission of Texas (PUCT), which allows residents and businesses in deregulated markets to compare and choose electricity plans. However, Power to Choose may not be the best energy comparison tool for most people.
Who has the cheapest electricity rates in Texas?
Gexa Energy, 4Change Energy and Frontier Utilities typically offer the cheapest electricity rates in Texas. Note that the cheapest plans these providers offer tend to be bill credit plans. Bill credit plans may help you save money when you qualify for the credit. However, they often lead to unpredictable energy costs because of how much Texans’ energy rates vary from season to season. We recommend that you thoroughly read your EFL before enrolling in one of these plans and consider transparency as well as cost.
What’s the difference between fixed and variable rates?
With a fixed-rate energy plan, your electricity rate stays the same for the entire duration of your contract, which is usually 12, 24 or 36 months. Variable rates, on the other hand, fluctuate month to month based on market conditions, such as supply and demand, weather events, seasonality or changes in natural gas costs. Variable-rate plans tend to cause unpredictable energy bills, while fixed-rate plans offer more consistency.
How do I avoid hidden fees when choosing an energy plan?
When choosing an energy plan, carefully review the terms and conditions laid out in your EFL to avoid hidden fees. You can also use comparison tools such as Home Energy Club to compare plans and rates side by side, examining both the advertised monthly rate and any additional fees. We also recommend reviewing the plan’s energy charge and comparing it to the average rate per kWh at the top of the EFL to see how much variance there is across usage levels.
