How Texas Electricity Contract Renewals Work

Hey! Is your electricity contract about to expire? Do you know what to do next? The wrong move now could cost you hundreds of dollars later.

If you’re like most people here in Texas, you probably haven’t even thought about your energy contract since you first signed it a year ago. However, electricity contracts here are different from other states. Because of the deregulation in our state, there are a number of factors that can make this transition more than a little complicated. If you’re facing an electricity contract end date in the coming days and are curious about electricity contract renewals, you’ve come to the right place.

Here at Power Wizard, we have a team of experts with a combined decades of experience helping homeowners and families in Texas find affordable energy contracts that suit their specific needs. In the following guide, we’re going to spill the beans on how electricity contracts work in Texas, when to renew, when to switch plans, and so much more.

Let’s get into it.

Understanding Electricity Contracts in Texas – Caveat Emptor

In 2002, Texas introduced electricity deregulation in Texas, providing customers with the freedom to choose their own electricity providers. The idea was that this competition would enable customers to get cheaper electricity. However, deregulation also meant that the electricity market was opened up to the wiliest marketing schemes you can imagine. Hundreds of years ago, lawyers started using a Latin term: Caveat Emptor. It means “buyer beware,” and nowhere is this more true than in the Texas electricity market.

Ca·ve·at emp·tor
noun
the principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.

There are three main entities in this market: Generators, Transmission and Distribution Utilities (TDUs), and retail electric providers (REPs). Generators produce electricity, and TDUs provide and maintain the infrastructure to deliver energy. The REPs are the salespeople. They are the companies that homeowners like you will primarily be interacting with as you purchase your electricity plan each year (or however long you sign a contract for).
One of the key impacts of deregulation is that REPs are not required to notify customers that their plans are about to expire until 30 days prior. Keeping track of your contract’s expiration dates, doing research to determine the most affordable new plans, and renewing or switching contracts are all up to you. This can make dealing with a contract end date a hassle. Failure to act can result in automatically being placed on a monthly plan with variable or higher fixed rates that will shock you at the end of the month.

What Electricity Plans Are Available?

There are two main types of electricity plans available that are designed to cater to different needs and preferences. These plans have their own pricing models and can be divided into the following two categories:

Fixed-Rate Plans

Locked in rate, no surprises!
Makes monthly budgeting easier
Consistent and predictable bills

Variable-Rate Plans

Based on market prices and trends
Unexpected and unpredictable spikes
Changes by the month

Fixed-rate plans offer a set electricity rate that remains constant throughout the contract term. The rate is usually expressed as cents per kilowatt-hour (kWh). These plans can provide stability but can have penalties for early termination. Also, if the market shifts and prices fall, you could be spending more than you need to if you signed up for a long-term contract. Variable-rate plans, by contrast, have rates that can fluctuate monthly based on market conditions. This can mean a lower bill during periods of low demand but can have a higher bill in the heat of summer as rates skyrocket.

Dealing With A Contract Expiration

If you’re dealing with a contract expiration, you might be curious about contract terms and durations. Generally, most electricity contracts come in 12-month, 24-month, and 36-month lengths. Check to see if your plan has an automatic renewal clause, as you cannot count on courtesy reminders other than the 14-day required notice. If you’re looking for the easiest way to find the most affordable electricity plan for your family, sign up with Power Wizard today. We’ll help you find the plan that’s just right, and we’ll also help you deal with contract expiration by automatically finding the new best option, whether that’s renewing or switching to a new contract.

The Best Time To Renew Electricity Contract In Texas

If you’re not up against a deadline, you may be wondering, when’s the best time to renew an electricity contract in Texas? Should I renew my electricity contract? Or, should I find a new plan? Generally, it’s best to do your research to look at market conditions and seasonal variations. This can get somewhat complicated, but many electricity customers in Texas use spreadsheets to document the data they’ve gathered. Be sure to look at future price projections as well as your own personal energy usage patterns, some plans have extra service fees if your usage doesn’t meet certain minimums. For example, if you are expecting an upcoming significant change in your electricity needs, it may be a great time to renew your electricity contract but make sure you take into account your early termination fee (ETF) and see if it’s worth it. The best time to renew electricity contract will be different for each energy customer and homeowner and fun fact, you can enroll in another plan up to fourteen days prior to your contract end date without paying at ETF. However, if you can time it right, you can wind up saving hundreds of dollars on your energy bills. Sound confusing? It is, and that’s where Power Wizard can help. Power Wizard searches hundreds of plans to find the best one for you, and even switches you when your contract is up for renewal.

How To Renew Your Energy Contract

The electricity market here in Texas is not simple, nor is it very straightforward. In order to find the best deals, you need to get past all the marketing jingles and tempting jargon. Get the details of all the available options when it comes to plans (including Fixed-rate plans, variable-rate plans, and index plans). Then, look at the special deals that each REP offers and see if any apply to your specific situation, usually these only apply to new customers. Also, read the fine print and carefully review all the terms and conditions of the contract. There may be hidden fees or fine print that could end up surprising you. Many buyers find it helpful to write all of this information down (as previously mentioned, an Excel spreadsheet is often used). Then, you can combine all this data with customer reviews in order to find the company and the contract that you are most interested in working with. This is a lot of work and can leave you with headaches and unnecessary stress as you continually strive to find that “better deal” that always seems just out of reach.
When you begin “shopping” for new providers, you might see a number of comparison websites. Use these resources with caution, as some of these sites are considers brokers and actually paid for by companies behind the REPs. This introduces a level of bias that could be deceptive to the typical consumer. Be sure to look at a variety of sources as you collect your data in preparation to make your decision. Here at Power Wizard , we are only paid for by our customers and have only their best interest in mind.

Never forget that as a customer in the deregulated Texas electricity market, you have the ability to negotiate with your current provider if the REP tries to keep you as a customer. Once you have done the research and have a solid understanding of current market rates, you can build a stronger position for your negotiations. Reach out to your provider and express your interest in opening up negotiations for a new contract. If you have received competing offers from other REPs, be sure to mention them during the negotiation process. Finally, remember that compromise is almost always the best way to conclude a contract negotiation. You might get lower rates in exchange for a longer contract term.

Don’t be plagued with the idea that if you had just looked a little harder, you might have been able to save more on your energy. Why not leave your electricity contract shopping to the professionals and let them handle it for you? Power Wizard has the insights and the expertise to help you find the right plan. Plus, we also provide a hands-free service so that you don’t need to worry about keeping track of market conditions or your own plan’s expiration dates.

Avoiding Common Pitfalls in Contract Renewals

The first, and perhaps most common pitfall to avoid in contract renewals is the auto-renewal trap. As previously mentioned, REPs are only required to notify you 30 days prior to your upcoming expiration date, not leaving you much time to shop. Consequently, your contract might easily automatically renew at unfavorable terms. If you are managing your electricity manually, be sure to set a reminder well in advance of your expiration date, so that you have time to do your research and make an informed decision.

Another big mistake to look out for is failing to consider changes in your energy usage patterns. If another child is on the way, or you are planning on installing new high-consumption appliance like a hot tub, you might want to consider whether or not your contract is going to fit your needs. Also, if your current life situation demands flexibility, a variable-rate plan may be a better choice than a fixed-rate option.

One of the easiest pitfalls to fall into when dealing with electricity contract renewals in Texas is overlooking contract terms and fees. Many of these large corporations invest big money in figuring out ways to confuse you and the fine print of many contracts can get very difficult to understand. However, if you overlook factors like contract length, cancellation policies, additional fees, and billing procedures, you could be in for an unexpected surprise.

How An Expert Can Help

Shopping for electricity in Texas can take many long hours and in many cases, is an intentionally confusing process. Often, a simple contract renewal is not the best way to save money. Loyalty is not always rewarded like you’d think. Many times, a competitor will have a better deal based on changing market conditions. You might want to choose “cancel electricity contract.” Always check your electricity plan to see when it expires and add it to your calendar as a reminder. Of course, if you’d like to completely opt out of this hassle, sign up with Power Wizard! We protect our customers from falling into unfavorable plans at the end of their term and help you switch up to 30 days in advance of your expiration. Plus, we’ll do all the research to find you the best plan for your unique needs.

Here’s How it Works:

Access the Best Plans
Many enticing plans aren’t as great as they appear. Our smart technology searches and compares 100s of electricity plans within seconds to find the best one for you.

Flexible Enrollment Options
After choosing the best electricity plan for you, we then manage the entire enrollment process on your behalf. Leave the hassle to us.