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What To Consider When Choosing An Energy Plan In Texas


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In 2002, the Texas electricity market became open to competition, allowing residents to have the opportunity to choose their own energy provider.

Rather than relying on their local utility to provide them with electricity, most Texas residents can now shop around from a variety of providers and choose the perfect energy plan suited for their homes and lifestyles.



Since the energy market opened, more and more energy providers have entered the industry, offering various products and plans. While it’s great to have numerous options, it can be confusing and difficult to select an electricity plan.



With energy plan types, varying electricity rates in Texas, term lengths, and enticing offers and rewards, shopping for an energy plan may be an overwhelming task. So, to simplify the process of checking out energy plans in Texas, read this guide to choosing the right plan for you.



1. Switching Vs. Moving In

Do you want to simply switch energy plans, or are you moving into a new home that requires a new plan?

  • Switching Plans

If you’re switching plans for your home, you need to check your current contract. You’ll need to determine how long you have left in your contract. If you want to switch before the contract ends, you need to consider the early termination fees or EFTs.

Your current energy plan should have an Electricity Facts Label (EFL) disclosing the fee you’ll pay if you cancel early. If you find an energy plan with a lower rate than your current one, you can go ahead and pay the early termination fee and make the switch.

Also, if you wait until 14 days of your current contract expiration to switch providers, you can avoid the fee. Take note that you can enroll in the plan months or weeks before the start date to secure the plan at the advertised rate at that time.

 

  • Moving In

If you’re moving from another city or state, you’ll be asked to provide your move-in date during your enrollment process. You can get an expedited date as needed.

If you’re moving to a newly built home, make sure to speak with the transmission and distribution utility company in the area. This allows you to be certain that meter hookups are ready when you move in and that an ESID number is assigned to your new address. This number will be required by the energy provider when you enroll in a plan.

However, if you’re moving to a condo or an apartment, check with your landlord to determine if you’ll be responsible for lining up electricity or if the landlord manages the energy purchases.

 

2. Determining Your Electricity Usage

The price you pay for electricity will depend on your energy usage. To get an idea of your typical energy usage, you can check your past electricity bills.

You can estimate your future energy consumptions based on your prior 12-month usage. This allows you to check for seasonal fluctuations, understand your highest and lowest energy use, and choose the best plan for your home.

In general, the estimated monthly usage level is:

  • 500 kWh for condos and apartments
  • 1,000 kWh for small- to mid-sized homes
  • 2,000+ kWh or larger homes

Providers usually design each plan to offer optimum pricing for a certain range of usage. Thus, it’s important to choose the correct plan for your home based on your expected consumption. Picking a plan that doesn’t fit your home will make you end up with high bills.

 

3. Determining Term Length

Energy plans, especially fixed-rate plans, can vary from month to month to a few years at a time. As mentioned before, most energy plans come with a term limit. So, if you end your contract early, you may have to pay an early termination fee.

When thinking about term length, you need to consider your situation carefully. Are you temporarily moving to Texas for school? Or did you buy a new home in Texas with the expectation of staying there for good?

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4. Deciding The Plan Type

Energy plans in Texas are often categorized into four types:

  • Fixed-Rate Plan

This plan means you’ll lock in an energy rate for the term of your contract. Usually, the common term lengths are 24, 12, and 6 months.

Your bill will stay stable throughout the season, meaning you can avoid price hikes during peak season. However, you’ll also miss out on lower bills during lean seasons.

 

  • Variable-Rate Plan

This plan means that the rate you pay for your energy use may fluctuate based on the energy’s current market price.

Energy price depends on numerous factors, including demand, weather, fuel prices, and distribution system. A variable-rate plan is flexible since you’re not locked into a contract.

That said, you’ll have to pay a higher price during peak seasons but enjoy lower prices during low-demand seasons. This type of plan is ideal if you like to keep an eye on prices and shop around.

 

  • Indexed Plan

Similar to a variable-rate plan, the price for an indexed or market plan can go up or down each month. The only difference is that plan rates are directly tied to a pricing formula associated with a publicly available index.

If the index falls, your monthly rate drops and vice versa. If you’re considering this plan, you need to ask the energy company for specifics on the pricing formula, as well as when and how you’ll receive notifications of changes to the index.

 

  • Prepaid Service Option

A prepaid service allows you to make energy service purchases in advance. It is a pay-as-you-go service with your energy usage calculated every day via a smart meter or other specialized devices.

This type can be provided as either a variable, a fixed, or an indexed plan. Take note that prepaid service will require upfront payment for energy service. So, make sure to contact the REP for more information before deciding to go with this type of plan.

 

5. Considering Month Matters

It’s no secret that rates are usually higher during the summer months due to the significant increase in electricity demand.

So, let’s say you decide to enroll in a long-term, fixed-rate plan during summer, then you will be locking in at expensive pricing levels.

A good strategy is to enroll during the late winter or early spring months to gain a lower rate for the term of your plan.

Take note that it’s possible that this strategy won’t always hold true because of market supply-demand fluctuations. However, the odds are always good when locking in a rate during the low-demand seasons to save money.

 

6. Considering Rewards

Most energy providers offer rewards, such as a refer-a-friend program or free electricity credits for specific plans that can provide attractive savings. If having a reward option is important, you should consider the rewards provided and determine which ones would offer the biggest benefit to you.

 

Conclusion

Shopping for an energy plan for your Texas home shouldn’t be that difficult. Once you’ve determined the important factors above, you can make an informed decision on which energy plan to choose and simply sign up with your preferred provider.