Cheap Energy: How to Lower Your Electricity Bill in Texas

If your electricity bill makes you do a double-take every month, you’re not alone. Texas experiences blazing heat in the summer and cold snaps in the winter, and keeping your home comfortable during those extremes can take a toll on your wallet.

Luckily, the right electricity plan and a few small changes can make your energy dollars go further. In this guide, we’ll share practical tips to help you use energy more efficiently and show you how Power Wizard can help you find a plan that keeps your monthly costs steady and stress-free.

Cheap energy is not just the lowest advertised price per kilowatt-hour (kWh). True savings come from understanding how your usage aligns with the plan’s structure, including fees, contract length, and peak-hour charges (if applicable). A plan that looks cheap upfront may end up costing more when you consider real-life usage patterns, hidden charges, and your energy consumption habits.

Why the kWh Price Doesn’t Tell the Full Story

Retail electricity providers (REPs) often promote low rates that may only apply to specific usage tiers, time windows, or contract lengths. These teaser rates can reset after a few months or include unexpected charges like base fees or penalties for low usage.

For example, a 9.2¢/kWh plan might only apply if you use around 1,000 kWh each month. Falling above or below this target could result in a different rate entirely.

Your Usage Patterns Matter

Even if two homes are on the same plan, their energy bills could differ dramatically based on when and how they consume energy. A household that primarily uses energy at night may benefit from free night plans, while another that runs appliances during peak hours (usually morning and afternoon) may pay more with that same plan.

Understanding your historical energy usage is key. Do you use electricity mostly in the evenings or on weekends? Do you have energy-intensive appliances or an EV charger at home? These details matter when comparing plans.

Hidden Costs and Contract Terms

Many plans come with extra conditions that may not be obvious in promotional materials. Look for:

• Minimum usage fees – charged if your consumption falls below a threshold
• Early termination fees (ETFs) – fees for switching before your contract ends
• Peak vs. off-peak pricing – higher rates during high-demand periods
• Base charges – flat fee on an electricity bill that remains the same regardless of electricity usage
• TDU delivery fees – charged for delivering electricity to your home

Some providers also automatically renew your contract at higher rates unless you proactively cancel or renegotiate. Always read the Electricity Facts Label (EFL) to uncover these details.

Since 2002, most of Texas has operated under a deregulated electricity market. In a deregulated model, the generation, retail of electricity, and the delivery infrastructure are all separate. Companies that generate power sell the electricity to retail electricity providers. Consumers can choose from a variety of REPs offering different plans, rates, and incentives, while the physical infrastructure—like power lines and maintenance—remains managed by a utility company (Transmission and Distribution Utility, or TDU).

This separation creates an open and competitive marketplace intended to lower prices and increase consumer choice. However, it also introduces complexity: each provider may structure their rates differently, use varying contract terms, or offer promotions that can be at times hard to understand. Without thorough research or the right tools, consumers may end up overpaying despite choosing what appears to be the “cheapest” option.

Why Texas’s Energy Market Is Unique (and Complicated)

Texas stands out from other states for two main reasons:

1. 1. Mixed Market Structure – Only certain parts of Texas participate in deregulated energy. Customers served by investor-owned utilities outside the ERCOT grid—such as Entergy Texas, Southwestern Electric Power Company (SWEPCO), Southwestern Public Service Company (SPS), and El Paso Electric—are excluded from deregulation. In addition, some municipal and cooperative utilities within ERCOT, like Austin Energy and Bluebonnet Electric Cooperative, have opted out of the retail choice program.
   2. Volatile Pricing – Due to deregulation, electricity prices in Texas are subject to wholesale market fluctuations driven by demand, weather, and fuel prices. Without understanding peak-demand periods or seasonal rate shifts, consumers may lock into plans that unexpectedly spike in cost.

These unique factors require Texas residents to be especially strategic in selecting an energy plan tailored to their usage habits and region.

If you’re unfamiliar with the energy market in Texas, your search process might look like this:

1. Go to Google or another search engine
2. Type in “Energy Company Near Me”
3. Click through a few search results until you find a chart listing energy companies and their rates
4. Choose the plan that advertises the lowest price per kilowatt-hour (kWh)
5. Sign up immediately, assuming you’re getting a great deal
6. Begin to wonder what a kilowatt actually is, but shrug it off
7. Breathe a sigh of relief now that the process is over, only to be surprised when the first bill arrives higher than expected

This trial-and-error approach is common, but it’s why many Texans end up overpaying for electricity. Electricity plans in Texas are rarely one-size-fits-all. The cheapest rate on paper might not reflect your actual usage needs, property size, or lifestyle patterns. Choosing based on price alone often leads to hidden fees, mismatched rate tiers, and long-term costs that negate any short-term savings.

The real question isn’t:

What’s the cheapest energy company?

But instead:

What’s the best energy company for my unique situation?

Factors like whether you’re home during peak hours, whether you have solar panels or an EV, and your average monthly consumption all influence what plan is truly most affordable for you.

Fortunately, you don’t have to figure this out alone. Tools like Power Wizard can help you choose a plan based on your needs and wants, not just flashy pricing.

Many energy companies advertise seemingly low electricity rates or enticing promotional offers—like gift cards, bill credits, or free smart devices—to lure in new customers. But these attractive perks often mask the true long-term cost of the plan.

Common red flags to watch for include:

• Higher long-term rates: Introductory prices for short-term plans may skyrocket after the contract ends, especially if the contract automatically renews at market rates.
• Strict contract limitations: Some plans may lock you into long-term agreements with early termination fees, making it expensive to switch.
• Usage restrictions: Rates may only apply under very specific conditions (e.g., using 1,000 kWh/month), with much higher rates if you fall outside that range.
• Hidden fees and pass-through charges: Charges such as base fees, minimum usage penalties, or other fees may not be clearly advertised upfront.

Marketing tactics like these can distract from a plan’s real value. A flashy incentive might feel rewarding in the moment, but could end up costing you far more over time.
The best way to protect yourself? Always read the EFL in full and compare the total cost of ownership based on your actual usage rather than relying on advertised rates.

Let’s consider two similar households—Family A and Family B—living in the same apartment complex. They have identical floor plans, appliances, and even signed up for the same electricity plan: a “Free Nights and Weekends” deal that advertises big savings.

Family A

• Both parents work standard 9-to-5 jobs outside of their home.
• The family is home in the evenings and all weekend.
• They use electricity during off-peak hours: cooking dinner, doing laundry at night, and hosting weekend gatherings.For Family A, the plan works well. Their usage aligns with the plan’s free hours, significantly lowering their bill.

Family B

• Both parents work from home during the day.
• Most of their energy use—laundry, HVAC, cooking—occurs during daytime peak hours.
• They frequently dine out and aren’t home much at night or on weekends.

Despite being on the same plan, Family B ends up with higher bills because their usage doesn’t align with the plan’s benefit window. In fact, the “cheap” plan costs them more than a standard flat-rate plan would.

Solar panels can be a good alternative to traditional electricity, but whether they make your overall electricity “cheaper” depends heavily on context. While upfront installation costs can be high, solar can significantly reduce or even eliminate your electricity bills over time—especially if your home receives ample sunlight and you stay in the same property long enough to recoup the investment.

Factors That Influence Solar Costs

• Panel Cost and Type: Different solar panels vary in efficiency, longevity, and price. Higher-end models may cost more initially but offer better long-term returns.
• Installation Complexity: The layout and structure of your roof, along with any required permits or electrical upgrades, can affect installation costs.
• Your Energy Needs: The more energy your home consumes, the more panels you may need, which increases both cost and potential savings.
• Seasonal and Geographic Fluctuations: Homes in sunny climates generate more solar power year-round. In areas with long winters or frequent cloud cover, solar may offer reduced benefit.
• Energy Production: If your solar system doesn’t produce enough energy to power your home, you’ll still need to pay for an electricity plan from a local REP. However, if your panels produce excess energy, you could earn bill credits if you opt for a solar buyback plan.

Long-Term Considerations

• Return on Investment (ROI): While the upfront cost can range from $10,000 to $30,000 or more (before incentives), most homeowners recoup this within 8–10 years through reduced energy bills (depending on your system and usage).
• Incentives and Rebates: Local rebates and utility incentives can lower the net cost of solar installation.
• Energy Independence: Solar helps insulate you from rising utility prices and outages, especially if paired with a battery backup system.
• Home Resale Value: Properties with solar installations often see an increase in market value.

Bottom Line

Whether solar panels can make your energy usage “cheap” depends on your home’s location, your energy usage, the available incentives, and how long you plan to stay in your home. Evaluate both upfront costs and long-term savings to determine if solar is the right move for your household.

Lowering your electricity costs in Texas isn’t about finding the cheapest rate; it’s about choosing a plan that aligns with how and when you use energy. With the state’s deregulated market, you may have options, but that also means more room for error if you don’t understand how plan structures and seasonal pricing work. Here’s how to optimize your energy expenses the smart way:

Match Your Usage to the Right Plan Structure

Many Texas electricity plans are built around specific usage thresholds or time-of-use discounts. If your usage doesn’t align with these tiers or timing windows, you may end up paying more than expected. Use your historical usage data to determine the best structure or choose a “true” fixed rate plan.

Avoid Shopping During Winter or Summer

Texas is known for extreme weather, including heatwaves, hurricanes, and winter storms. During these periods, wholesale electricity prices can surge dramatically, leading to higher contract rates.
If possible, avoid locking in a new plan during these times. Sign up or switch during milder months (spring or fall) when demand is lower and rates are more competitive.

Read the EFL Before Enrolling

The EFL is your blueprint for understanding a plan’s true costs. It outlines:

• Rate structure
• Contract length
• Minimum usage fees
• TDU delivery charges
• ETFs
• And More

Don’t skip the EFL. The fine print is where most “cheap” plans reveal their hidden costs.

Monitor Your Monthly Usage

Be aware of how much energy you’re using each month. In Texas, some plans penalize low usage, while others reward steady consumption. Use your provider’s app or portal to track usage trends, and adjust your habits (like shifting laundry to off-peak times) to reduce bill spikes.

Consider Fixed-Rate Plans for Predictable Billing

While variable-price plans may appear cheaper upfront, they expose you to market volatility. A fixed-rate plan offers stability and can protect you from:

• Seasonal rate hikes
• Grid instability due to extreme weather
• Sudden contract renewals at higher prices

In a state like Texas, predictable pricing can provide both financial and emotional relief.

Texas Tip: Don’t Forget Your ZIP Code

Always compare multiple plans using your zip code. Pricing varies by location due to different TDU rates. A great deal in Dallas might not be cost-effective in Houston.

The easiest way to lower your electric bill is by choosing a plan that actually fits your usage. Paying for the wrong rate structure—or hidden fees you didn’t see coming—can cost more than you think.

If you’re looking to explore potential long-term savings, enter your ZIP code into Power Wizard’s comparison tool to view and compare electricity plans available in your area. Actual savings will vary by household and usage pattern.