You’ve probably seen the term “flat-rate electricity plan” while shopping for energy online and wondered what it actually means. It sounds simple enough—just one steady price each month—but the reality isn’t always that straightforward. Some Texans love the predictability, while others discover hidden costs that don’t match their usage. Before you decide whether a flat-rate plan fits your lifestyle or budget, let’s dive into what makes it different from other options and what to look out for when comparing offers.
A flat-rate electricity plan charges the same amount each month, no matter how much power you use. Instead of paying a rate based on kilowatt-hours (kWh) used, your bill is set at a fixed price that covers a specific usage range based on your historical usage. The Retail Energy Provider (REP) adds some padding to the price in case you use more electricity than your normal usage.
This setup can make budgeting easier because your costs remain predictable, even when your electricity use shifts slightly. However, that convenience comes with tradeoffs. If your usage consistently falls below the plan’s set range, you could end up paying more than you would on a traditional fixed-rate plan.
Flat-rate plans work best for Texans with steady, predictable energy habits who value a consistent bill over the lowest possible rate.
Flat-rate and fixed-rate plans may sound similar, but each one structures pricing differently.
Understanding how each type of electricity plan calculates your bill helps you choose the one that best matches your energy habits and budget goals. Below is a quick comparison:
| Plan Type | How You’re Charged | Best For | Watch Out For |
|---|---|---|---|
| Flat-Rate | One total monthly price up to a set kWh limit | Budget-focused households with significant electricity usage that want predictable costs | Paying significantly more when your electricity usage is low |
| Fixed-Rate | Same price per kWh for your entire contract | Homes with steady or fluctuating energy use want protection from spiking rates | Early Termination Fees (ETFs) |
Texas has one of the most unique electricity markets in the country. Because most of the market is deregulated, most Texans can choose their electricity provider instead of being tied to a single utility. This open market gives consumers access to a wide range of electricity plan types, including flat-rate plans.
REPs design flat-rate plans using a mix of customer data and cost forecasting. They estimate your monthly energy usage based on home size, past consumption, and smart meter data. Then, they combine wholesale energy costs, Transmission and Distribution Utility (TDU) delivery fees, and company overhead into one predictable monthly price. Think of it like an unlimited phone plan: you pay the same amount each month.
TDUs, like CenterPoint Energy in the Houston area or Oncor Electric Delivery in Dallas, are responsible for delivering electricity to your home, and each has its own delivery fees that affect your total rate. Because delivery fees vary, two households in different cities could pay different flat-rate prices even with the same provider. For example, a plan from Provider A might cost $145 per month in Dallas, but $159 in Houston due to differences in TDU fees. For flat-rate plans, TDU fees are typically bundled with the total price you pay and will not change throughout your contract. However, this can vary by provider, so always read the Electricity Facts Label (EFL). We’ve included an example of an EFL for a flat-rate electricity plan below.
TDUs are assigned by location and cannot be changed. Their delivery fees are regulated charges that are the same across all REPs in your area. This means switching REPs will not change your TDU delivery fee.
Smart meters record electricity use every 15 minutes. This detailed data helps REPs create more accurate flat-rate offers that align with your real energy habits. It also gives you the ability to track your own usage and make adjustments if you’re close to exceeding your plan’s monthly limit. You can access your usage data on the Smart Meter Texas website.
Flat-rate electricity plans are designed for convenience and predictability. But like any plan type, they have both benefits and drawbacks. Whether a flat-rate plan is right for you depends on your household’s energy habits and how steady your usage is throughout the year. Use this table and the pros and cons below to guide your decision.
| Best For | Not Ideal For |
|---|---|
| Households with steady monthly usage | Homes with large seasonal swings in energy use |
| High-usage households | Low-usage or variable-usage households |
| People who prefer simple, set billing | Shoppers looking for the lowest possible rate per kWh |
Flat-rate plans can offer peace of mind and simpler budgeting for those who prefer steady costs. Here are a few of the main advantages:
While flat-rate plans offer stability, they aren’t always the most cost-effective choice for every household. Consider these drawbacks before signing up:
Flat-rate plans in Texas typically come in two different forms. These examples show what you might find on the market, though actual rates and availability vary by ZIP code and provider. The goal is to help you understand how these plans typically work so you can find the one that best fits your energy habits.
The most common flat-rate setup charges one set monthly amount for any usage. These plans typically include a usage range—often between 500 and 1,000 kilowatt-hours (kWh)—that your monthly payment covers. As long as your consumption stays within that range, your bill remains consistent. If you fall below that usage threshold, you’ll be charged a higher rate per kWh.
Flat-rate plans are best for households with steady, high usage. If you live in a smaller home or apartment, or don’t use much electricity, a flat-rate plan probably isn’t the best choice for you. Using the same example fixed-rate plan as before (15.2¢ at 500 kWh, 14.8¢ at 1,000 kWh, and 14.5¢ at 2,000 kWh), if you only use 1,000 kWh each month, you’d pay 14.8¢ per kWh ($148 in a month), while on the flat-rate plan (shown in the EFL above) you would pay $199.
Shopping around and comparing other electricity plans can probably help you find a lower rate that better fits your usage.
Before signing up for a flat-rate electricity plan, it’s important to take a close look at the EFL. This document breaks down all the details of your plan so you can see exactly how pricing works. When reviewing the EFL, pay attention to:
No, they’re not the same. A flat-rate plan charges one set monthly amount for a specific usage range, regardless of how much electricity you actually use. A fixed-rate plan locks in a consistent price per kilowatt-hour (kWh), so your bill changes each month based on your energy consumption. Both offer predictability, but they calculate costs differently.
It depends on your household’s usage patterns. If your electricity use stays consistent month to month, a flat-rate plan can make budgeting easier. However, if your usage fluctuates or drops during mild seasons, you might end up paying more than you would on a traditional fixed-rate plan.
Because Texas is a deregulated market, not every provider offers a true flat-rate plan.
Yes, but timing matters. Most flat-rate plans have contract terms, and switching before your term ends may result in an ETF. However, you can cancel within 14 days of your contract’s expiration date without penalty. The ETF will also be waived if you cancel early due to a move.
Shopping for electricity in Texas comes with plenty of choices for residents in deregulated areas, and one option some T...
