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Light Companies in Texas: How To Choose Which One Is Best For You?

Right now, there are over 130 light companies in Texas.

Between them, there are currently over 1,000 plans to choose from. 

Could you imagine shopping at a grocery store with over 1,000 types of bread, all different sized loaves, and all different brands? It’s unlikely you’d ever return to such an overwhelming grocery store, even if you did manage to make the impossible decision about honey wheat vs. split top wheat.

Shopping for light companies in Texas is a lot like being in an aisle of over 1,000 bread types, just looking for something that will get you through the coming week. With so many options, all with different rates, different contracts, and different qualities of service, how can you be 100% sure you’ll find the best one for you?

Simple. Let Power Wizard do the work for you!

Our unbiased algorithm runs 24/7 to find you the best and most affordable electricity plan based on your home and usage profile. All you need to do is enter your zip code into the Shopping Tool, sit back, relax, and let Power Wizard handle the rest!

So, stop wasting your valuable time and energy researching the thousands of options available. 

 

In this guide, we’ll help you understand the deregulated energy market in Texas and show you that Power Wizard will support you in finding the best plan for your home, lifestyle, and budget.

Texas Has Deregulated Energy Companies – What Does This Mean For You?

Texas has a deregulated energy market.

But what exactly does “deregulated energy” mean?

Deregulated energy in Texas means that you get to choose which energy company (also known as Retail Electricity Providers) to use as your electricity supplier.

Many states do not have deregulated electricity, meaning that the residents of those states have to purchase their energy from utility companies, most of which are either heavily regulated by the government or government-owned. Oftentimes, those residents do not have a choice in which utility company to choose.

Deregulated energy in Texas creates competition among local Retail Electricity Providers, allowing you to choose from thousands of different plans.

All of these light companies in Texas are fighting for your business. Because of this, they’re all fighting to have the lowest rate and most overall desirable plan.

As a result, you can shop around to find the best rate for you and your family.

Here’s the thing with deregulated energy, though:

There are so many plans out there that it’s hard to know which one is best for you. You might think it’s simply the “cheapest rate,” yet that’s not usually the case. To find the best plan for you, you’ll need to consider factors like the size and age of your home. We’ll explain more about this in a later section called “Finding The Best Electric Plan Depends On The Size Of Your Home, Your Usage, And More.”

Texas Deregulated Energy History

On January 1, 2002, the Texas Senate passed Bill 7. This Bill was the official start of deregulated energy in Texas as we know it today.

But, to truly understand the history of Texas energy, you need to go back to 1975.

In 1975, the legislature in Texas enacted the Public Utility Regulatory Act (PURA).

What did PURA do? It tried to help the state of Texas regulate certain aspects of electric utility providers, like what services and rates they offered.

But, PURA didn’t work like the state wanted it to.

Energy rates continued to climb. Consumers in Texas started to get worried about how high the rates were getting.

Then, in 1995, Texas passed Bill 373 to try to solve the issue of rising rates.

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This Bill required the Electric Reliability Council of Texas to do a couple of different things. The most important thing that this Bill did was that it “allowed for competition in the wholesale market.” And, just like that, the deregulated energy market existed in Texas.

After another 7 years, the Texas Senate passed Bill 7. This is the Bill that’s still in effect today.

What does this Bill do? It allows consumers in deregulated areas of Texas “to choose among various retail electricity providers (REPs).”

Today, if you live in a deregulated area of Texas, you can choose to buy your electricity from over 130 Retail Electricity Providers.

But, how exactly does deregulated electricity work for a consumer like you?

How Does Deregulated Electricity Work?

At the most basic level, deregulated electricity allows you, as the electricity consumer, to choose which Retail Electricity Provider you want to use based on their rates, services, offerings, and more.

We’ll explain how deregulated energy works through a short story:

Let’s say there’s a woman named Rhonda. And Rhonda needs to move to Texas for work. Specifically, her company has a new office in Houston, where energy is deregulated.

When she moves into her new home, she starts getting everything in order. She figures out how to pay for trash, recycling, and water.

She pulls out her checklist. The next thing she needs to do? Figure out how to find an electricity company.

Rhonda realizes that electricity is deregulated, and she has the ability to choose whichever Retail Electricity Provider she wants. She starts looking for cheap light companies in Houston, TX.

After researching, she’s still confused and isn’t sure which REP to choose. Some REPs have different rates of electricity per kWh than others. Other REPs seem to have the exact same rates as their competitors until Rhonda reads the fine print.

She finally decides on a Retail Electricity Provider after making a comprehensive spreadsheet. She’s still not confident that she got the cheapest rate, but she’s exhausted from researching and simply decided to choose one.

Rhonda thinks she got the “cheapest electricity company” based on the numbers that those Retail Electricity Providers gave, but Rhonda didn’t take into account her past usage, her home size, and other important details.

This brings us to a really important tip about light companies in Houston (and all across Texas).

The “cheapest rate” might not be the best rate for your home, your usage, and other relevant factors.

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What Is The Cheapest Electricity Company In Texas?

People, who live in deregulated areas of Texas are constantly asking themselves, “Who has the cheapest electricity rates in Texas?”

The answer isn’t as simple as you’d think.

The logical answer would be to look at which Retail Electricity Provider has the cheapest price per kilowatt-hour (kWh). A very simple number to compare.

However, as you’ll read in this next section, simply looking for affordable light companies with this strategy usually does not result in the best plan for you.

How Retail Electricity Providers Price Their Electricity Rates

Retail Electricity Providers in Texas base their rates on price per kWh, how long the plan is (6-month plan, 12-month plan, 24-month plan, etc.), and other factors.

But it gets WAY more complicated than that.

Since REPs are so competitive with each other, they try to give you certain perks or deals. Often those deals don’t actually serve you – they’re simply a marketing tactic.

Some will give you “free nights.” Others will give you “bill credits” when your usage is between a certain amount of kilowatt-hours, like between 1,000 kWh and 2,000 kWh. Some will even give you a free Google Home if you sign up.

You might even find an electric company with no down payment or an electricity company with no deposit.

As you can tell, it’s really confusing when you take these perks into account. But, it gets worse.

How Retail Electricity Providers structure their contracts could negatively impact your long-term rates.

If you don’t read the fine print, you might be left paying double the rate you initially thought.

Here’s what we mean by this:

Let’s say you buy a plan that’s 10.9¢ per kWh, and your plan is for 12 months.

In your contract, the Retail Electricity Provider might not be required to notify you when your contract is about to expire. That contract that you signed might also say in the fine print that after the first year, your rate will actually increase to 14.7¢ per kWh instead of 10.9¢ per kWh.

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These once cheap light companies in Texas just became much more expensive after your contract automatically renews.

From your position, it’s nearly impossible to know which plan is best for you.

Will “free nights” actually lower your bill? After your contract expires, will your rate become too expensive?

To choose the most affordable plan, you need to think about a couple of factors.

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Finding The Best Electric Plan Depends On The Size Of Your Home, Your Usage, and More

Instead of asking yourself, “What electric company has the best rates?” you should be asking, “What electric company will have the best rates for ME?”

And to do that, you need to answer these questions:

When was your home built?

Newer homes use different amounts of energy to heat and cool. The age of your home will be a determining factor in which electricity plan is best for you.

Why does your home’s age matter?

As you can imagine, newer homes are more energy-efficient. A home built in 2019 will have better insulation and energy efficiency compared to a home built in the 1950s.

How many kilowatt-hours does your home or apartment use per month?

REPs base their rates on the amount of kWh that you use. Different kilowatt-hours will result in different rates. If you’ve had electric bills in the past, it’s important to consult those to understand your historical usage.

As you start to look for plans, you’ll notice some common kilowatt-hours that providers use to determine your rates are – 500 kWh, 1000 kWh, and 2000 kWh.

What does this mean exactly?

The average amount of kilowatt-hours used per month for a home in the United States is 914 kWh.

But even knowing this information won’t truly help you since your home and usage is likely different than the average American.

Let’s say that you choose a plan for 1000 kWh. And that plan is 9.3¢ per kWh. Well, if you go over 1000 kWh during the month and use, for example, 1100 kWh, your rate might jump up to 15.2¢ per kWh.

Therefore, you need to consider what your expected kilowatt-hour usage is each month, so you don’t overpay.

How many square feet does your home or apartment have?

The size of your home is going to influence your electricity rates.

If you live in a home that’s 3,000 square feet and your neighbor lives in a home that’s 1,750 square feet, then you both will likely not benefit from the same plan.

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Why does square footage affect your rates?

Large homes usually use much more energy than smaller homes or apartments.

If you live in a 4,500 square foot home, then you might need a 2000 kWh plan, compared to a person living in a 600 square foot apartment, who might only need a 500 kWh plan.

There Are Hundreds of Plans – There’s No Way You Can Manually Find the “Cheapest Electricity Rates”

As of right now, there are over 2,500 electricity plans in Texas among the 130+ Retail Electric Providers.

That’s a LOT of plans.

And remember, just because a plan boasts a “cheap rate” doesn’t mean that it’s the best for your home size, the age of your home, and other factors.

There’s simply no way that you can manually go through each plan to find out which one is best for you.

You’d have to put together a complex algorithm and constantly run it to find that information.

*Thankfully, Power Wizard’s technology does that for you. Our unbiased algorithm runs 24/7 to find you the most affordable electricity plan based on your home and usage profile. *

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Read the Fine Print – Some Affordable Light Companies Aren’t So Affordable…

To determine exactly what you’re going to be paying for your energy, you’d need to read every word in your contract.

Some REPs might market themselves as one of the low rate energy companies and promote a deal with 8.1¢ per kWh (when you use 1,000 kWh). What you don’t realize, though, is that if you use 1,001 kWh instead of 1,000 kWh, your rate might automatically increase to 14.2¢ per kWh.

Other REPs may attract your attention with a cheap electricity rate of 8.3¢ per kWh for a 12-month plan. But what they don’t tell you is that they’ll automatically renew you in a new plan after 12 months, that’s 13.9¢ per kWh. Just like that, your rate increased over 50% without you knowing.

Here are some screenshots of real electricity contracts with “hidden fees” and other tricky information. Don’t fall into these traps.

Maybe you’re already aware of how the deregulated electricity market works in Texas – you know what Retail Electricity Providers are, and you understand how your energy usage influences which plan is best for you, but you aren’t sure how to switch plans.

How to Change Electric Companies In Texas

Here’s a step-by-step process on how you can easily change electric companies in Texas.

We share the manual way to do it below. This involves spending hours reading through your current contract, shopping around through hundreds of plans to figure out which one is best for your usage, and then determining if you’ll save money or not by switching.

Instead of manually searching through hundreds of plans, simply use Power Wizard’s Shopping Tool below and immediately see a savings forecast of what you could save based on the plans available in your zip code.

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Step #1: Determine your current contract’s status

The first part of the manual process to switch electricity providers is to read through your entire contract to determine its status.

You’ll need to figure out:

• When your contract expires
• If there are any fees to switch providers in the middle of your contract- look for the ETF, which stands for Early Termination Fee

This manual process of reading every word of your contract is time-consuming.

Instead of wasting hours of your time, you can use our Shopping Tool to discover how much you could save when Power Wizard looks at your usage to determine the best plan for you and your lifestyle.

And the best part? When Power Wizard enrolls you with your new electricity supplier, your current supplier contract will automatically end, so there will be a seamless switch to your new supplier. Power Wizard manages the switch from start to finish.

Step #2: Shop through thousands of plans to determine which one is best for you

The second part of the manual process to switch electricity providers is to research thousands of plans from over 130 REPs to determine which one is best for you.

This manual process of searching through all these plans is nearly impossible. To properly search through all of the available plans and read through every contract would be a full-time job.

Instead, you can use our Shopping Tool to discover how much Power Wizard could save you when you become a member. Our unbiased algorithm searches through hundreds of available plans on the market to ensure you never overpay for electricity again. And the estimate only takes a few minutes!

Step #3: Confirm and pay

The last part of the manual process to switch electricity providers is to actually sign up and pay.

The payment process is usually straightforward. But, it’s nearly impossible to get to this last step (with, objectively, the best plan for your usage) by doing everything manually.

Instead, you can use our Shopping Tool to consider how much you could save when Power Wizard signs you up for an electricity plan once you become a member. Power Wizard’s confirmation and payment process are simple.

But we don’t just find you the best plan available to match your energy usage. We also commit to monitoring the market 24/7 and ensure you never overpay for electricity again.

You can learn more about how Power Wizard works by going here.