Finding the right electricity plan isn’t always straightforward. Two plans can look similar on the surface, but charge you in completely different ways once your bill arrives. Fixed-rate and bill credit plans are perfect examples. The one that saves you money depends on how much electricity you use, when you use it, and how consistent your usage is from month to month.
This guide breaks down how these plans really work, what factors impact your final cost, and how to tell which option will give you the best overall value.
Bill Credit Plans are officially known as “Usage Credit Plans.” These two names are used interchangeably in the electricity industry. In this article we chose to use “Bill Credit” to refer to Usage Credit Plans.
Texas’s deregulated energy market gives most Texans the ability to pick both their electricity provider and the plan structure that fits their home. Two common options are fixed-rate plans and bill credit plans. Let’s take a closer look at each one.
A “true” fixed-rate electricity plan is designed for stability. When you sign a fixed-rate contract (usually between 3 and 36 months), your price per kilowatt-hour (kWh) stays the same (within a range) for the entire term, regardless of how market prices shift. This makes it easier to budget month to month, even during high-demand seasons when wholesale rates rise across Texas. For example, a household in Houston on a true fixed-rate plan might pay around 16.2¢ per kWh at 500 kWh, 15.0¢ at 1,000 kWh, and 14.4¢ at 2,000 kWh. These rates stay consistent throughout the contract term, even if market prices climb to 18¢ during a summer heatwave.
Here’s an example of an electricity bill credit plan that offers a credit when your usage meets the 1000 kWh threshold.
| Monthly Usage (kWh) | Rate (¢/kWh) | Credit | Estimated Bill |
|---|---|---|---|
| 500 | 16.2¢ | $0 | $81 |
| 1,000 | 15.0¢ | $0 | $150 |
| 2,000 | 14.4¢ | $0 | $288 |
These plans often include an Early Termination Fee (ETF) if you cancel before your contract ends for any reason other than moving. This means you have less flexibility if you decide to switch electricity plans or providers mid-contract.
Bill credit electricity plans (officially known as usage credit plans) are a type of fixed rate plan that offers incentives based on how much energy you use. Your rate is fixed, but when your monthly usage falls within a specific kWh range, your provider applies a credit—often a fixed dollar amount, like $75 or $100—to your bill. This structure can lead to lower overall costs for households that consistently stay within the target range, but it can also backfire if your energy use fluctuates. Fall short of the range, and you could miss out on the credit entirely.
Here’s an example of an electricity bill credit plan that offers a credit when your usage meets the 1000 kWh threshold.
| Monthly Usage (kWh) | Rate (¢/kWh) | Credit | Estimated Bill |
|---|---|---|---|
| 500 | 19.9¢ | $0 | $99 |
| 1,000 | 9.4¢ | $100 | $94 |
| 2,000 | 14.2¢ | $0 | $284 |
Choosing between a bill credit and a fixed-rate plan often comes down to your electricity usage habits. If your energy usage varies throughout the year, a true fixed-rate plan may offer more predictable bills. On the other hand, a bill credit plan can offer savings if you consistently use the same amount of electricity each month or consistently meet the bill credit threshold. To see which option fits you best, review your past 12 months of electricity usage to find patterns in how much power your home typically consumes.
Power Wizard’s energy experts have compared both plan types side by side so you can get a better idea of which one might meet your needs.
| Feature | Fixed-Rate Plan | Bill Credit Plan |
|---|---|---|
| Rate Type | Constant | Constant |
| Best For | Predictable budgets | Steady usage within the plan’s set threshold |
| Risk | Limited savings for high-usage households | Losing credits if usage fluctuates |
| Contract Terms | 3–36 months | 12–36 months |
| Billing Simplicity | Easy | Can vary month-to-month |
The biggest difference between “true” fixed-rate and bill credit plans is how your costs respond to changes in usage. If your monthly usage is stable and falls within the plan’s set usage range, a bill credit plan may save you money. If your usage fluctuates, those savings disappear, making a fixed-rate plan the more reliable choice. For example, a family in Houston with steady energy use could earn consistent bill credits year-round, while a Dallas apartment with lower, fluctuating usage might miss the credit entirely and end up paying more.
Both fixed-rate and bill credit electricity plans typically have long-term contracts. Their durations can vary by provider, but they often range from 3 to 36 months. These terms lock in your pricing structure and incentives for the duration of your agreement. While that can provide stability, it also limits flexibility if your energy needs or market rates change. It also introduces the possibility of incurring an ETF if you switch companies before your contract ends. However, that doesn’t mean that switching plans or REPs mid-contract never makes sense. For example, if your plan carries a $150 termination fee, switching might still be worth it if a new plan’s savings exceed that cost over the remaining months.
The right plan depends on how much electricity you use and how consistently you use it. A family home using more than 1,200 kWh per month throughout the year may benefit most from a bill credit plan that rewards steady consumption. A small apartment using less than 800 kWh each month may find a fixed-rate plan more cost-effective since they likely won’t qualify for bill credits.
Your electricity usage history is one of the most important tools for choosing the right plan. Understanding how much energy you use each month—and how that usage changes with the seasons—can reveal whether a “true” fixed-rate or bill credit plan will save you more over time. Reviewing your Smart Meter Texas data or the usage chart on your electric bill can help you spot patterns, like lower consumption in the winter or steady year-round usage. The more you know about your habits, the easier it is to find a plan that matches your household’s real energy needs.
Before you commit to any electricity plan, it’s important to review the Electricity Facts Label (EFL). This document outlines the structure of your plan and the costs you can expect each month. Every provider in Texas is required to include an EFL, and understanding it can help you spot the difference between what looks like a great deal and what actually fits your home’s usage.
Here’s what you’ll find in the EFL:
TDU fees, also known as TDSP fees, are regulated charges applied to all electricity plans in Texas. They may change a few times per year.
Choosing between a fixed-rate and a bill credit electricity plan ultimately comes down to how your household uses energy. If your monthly usage is steadily above 1,000 kWh, a bill credit plan might reward your consistency. If it fluctuates, a fixed-rate plan can provide predictable costs. Reviewing your past bills, reading the Electricity Facts Label, and understanding when credits apply can make all the difference in finding a plan that fits your lifestyle and budget.
With Power Wizard, shopping for electricity is simple. Start comparing Texas electricity rates today and find the right plan for your household.
Not usually. Most credits activate only above 1,000 kWh per month, meaning smaller households may pay higher rates without ever earning the discount. That being said, there are a few bill credit plans designed for households that use less than 1,000 kWh, but they are less common.
Yes. A fixed-rate plan locks in your kWh price for the duration of the contract, protecting you from price surges.
Most providers set the credit range between 1,000 and 2,000 kWh, though some plans may start credits at 800 kWh. Always read each plan’s EFL for details.
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