Lowest Cost Per Kilowatt Hour In Texas

So, you’re trying to find an affordable electricity plan in Texas and you’ve been searching sites just like this for longer than you’d like to think about. In fact, now that you think about it, how long have you been staring at this very screen, scrolling through article after article?

Unfortunately, the “lowest cost per kilowatt-hour” plan does not necessarily mean the best plan for your unique electricity needs. 

To find the best plan for your home, you would need to compare every single plan available to you, which — you guessed it — means more research.

Or does it? In this article will walk you through understanding the complexities of the electricity market and how to get the best electricity plan for you.

What Is a “Kilowatt”?

For some, the word “kilowatt” might sound like a foreign language.

What is a kilowatt? How does it affect you?

Well, it turns out kilowatts affect everyone because they are a measurement of energy usage.

If you pay your own electricity bill, you’ll want to know how you’re getting charged.

The bottom line of your bill every month is not just a made-up number. It’s carefully calculated by measuring your energy usage and multiplying it by the rate per kWh the company is charging you.

Understanding kilowatts is important to every person in Texas.

Read on so you can learn more and save money on your utility bill every month.

Low Cost Per Kilowatt-Hour Rate Plans in Texas

Say you’re shopping for an electricity company in Texas.

You might have already realized that there are hundreds of providers available in your area to choose from. This is because energy in Texas is mostly deregulated.

While you’re perusing rates and plans, you might think – to make this easier, I’m going to simply choose the company with the lowest cost per kilowatt-hour in Texas and sign a contract with them.

This sounds like a fool-proof way to save money on your bill every month.

Unfortunately, it’s not that easy.

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Rate structures can be very hard to decipher. Even if a rate seems “cheaper” than another rate, the way the company charges you can vary and end up being more expensive for you.

How Does Texas Set the Cost Per Kilowatt-Hour?

Texas is a unique place because, unlike most states, the energy market is deregulated.

In 2002, a new law passed that allowed private companies to sell power to individual consumers. This opened up a whole new market for competition.

It also opened up new ways for companies to get creative with rate structures.

Typically, you could expect to find the price of your electricity bill with the following equation:

Rate per kilowatt hour X number of kilowatt hours used = final cost

This equation is helpful as a starting point. However, there are a lot of other factors involved in deciphering your final bill.

Let’s start with the rate. Rates are set by electrical companies (also called REPs – Retail Electric Providers), according to the wholesale value of energy. Basically, they charge you according to the cost they are incurring from the companies who create the electricity – the power generators.

Power generators set costs based on the weather, stock prices, and market demand.

The REPs then have to tack on the cost of utility companies who upkeep the power lines. Then, they have to add fees for their services as well.

At the end of this line of costs and fees, you find your retail rate.

What Is the Average Price Per Kilowatt in Texas?

The average cost per kilowatt hour in Texas changes often, but today, the average residential customer pays about 11.85 cents per kWh.

How Does This Affect Me?

The average rate per kWh in Texas can give you a basic guideline for what you will be paying for electricity.

However, sometimes the average can be misleading.

Heating and cooling are the biggest influencers on your residential electricity bill every month. If you have less square footage in a new home that is very energy efficient, you will be spending a lot less than someone in a large, older home with inefficient heating and cooling elements.

Factors That Can Influence What You Pay Per Kilowatt-Hour in Texas

Many factors go into the final rate per kWh on your electricity bill.

Some of them include:

• Home size
• Home age
• Time of usage
• Hidden fees
• Fine print

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How Can I Find the Lowest Cost Per Kilowatt Hour in Texas?

It is entirely possible to find the electrical company with the lowest cost per kilowatt hour, and sign a contract based on the rate alone.

But, this decision may not save you the most money long-term.

Let’s take Bill for example:

Bill didn’t have time to research different types of plans, and he wasn’t aware of his own electricity usage. He just needed the power turned on fast.

So, he did just enough research to find the company that was offering the lowest rate that day and signed a year-long commitment.

Unfortunately, without looking at the fine print and rate structure, Bill had unknowingly signed up for a plan with a tiered rate structure. This meant that his rate would jump up after every tier of usage.

For example, if he only used 30 kWh per day, his rate would be 10 cents per kWh.

However, if he used more than 30 kWh, the rate would go up to 15 cents per kWh for the remaining hours. If Bill exceeded 40 kWh in a day, his rate would skyrocket to 25 cents per kWh.

Bill thought his usage was “average,” but he didn’t take into consideration the size and age of his home and his lifestyle. He lived in a large house and was home most of the day using electricity, so he ended up paying a lot more for his energy usage than he needed to.

This shows that the “cheapest” rate doesn’t indicate how much you will save on your electricity bill each month. There are hundreds of types of plans, and it’s important to choose the one that suits you individually.

Method 1: Manually Search Through All Available Plans in Texas To Find The Lowest kWh

Manually searching through all the available plans in Texas will require a large time commitment.

There are dozens of REPs in Texas who provide service, and you’ll need to contact or visit the website of each one individually to see if they are available in your neighborhood.

Once you narrow down the companies that service your area, you will need to follow these steps:

1. Contact or visit the website of each company individually for rate quotes. Be prepared to make a spreadsheet with different types of rate structures. Most companies offer many different types of plans depending on your needs.
2. Know your historical usage and understand your daily and seasonal electricity consumption. This is important in deciding what rate structures and promotions will work the best for your home.
3. Make sure you make a quick decision because electrical rates change frequently.

The manual method of finding an electricity plan to save you the most money is daunting.

Method 2: Use an Electricity Broker

Electricity brokers are companies that can help you  find the best electricity deals for you. These companies build relationship with energy providers to connect you with the best plans for your home.

What Type of Plan Offers the Cheapest Kilowatt in Texas?

And what is the cheapest electricity company in Texas?

It depends. It’s impossible to know what company or what plan will give you the overall cheapest rate per kilowatt without knowing your personal usage.

There are many types of rate plans, and each has pros and cons.

Fixed-Rate Plan

Fixed-rate plans can give you peace of mind that your rate per kWh isn’t going to change from month to month.

When you sign a contract for a fixed-rate plan, it means the company has agreed to give you the same rate for the length of the commitment.

The pros and cons of a fixed-rate plan are as follows:

Pros:

• Easy to budget, because your rate stays the same.
• If market rates for energy go up, you are at an advantage and paying less.
• The plan is still pay-what-you-use, so you won’t be paying a fixed amount, just a fixed rate per kWh. If you go on vacation for a month, you won’t pay for the electricity you didn’t use.

Cons:

• Budgeting is easier, but you might still have an unexpectedly high bill if you use more electricity than you intended. For example, using the air conditioning in the summertime can add up.
• If market rates for energy go down, you will be stuck paying a premium
• You might have to sign a long-term commitment with high cancellation fees.
• Oftentimes, rates per kWh in a fixed-rate contract will be higher than other plans, to make up for the months when demand is higher and market prices go up.

Variable-Rate Plan

Variable-rate plans can be unpredictable, but they can save you money in the long term.

The variable rate structure means that the electrical company can change its rate each month based on demand in the marketplace.

Some people would consider this a gamble: your rate could go down… it could go up. Some changes in the market are predictable though.

For example, electricity is in much higher demand in hot summer months when people are using their air conditioning. So, you can expect to pay more at that time.

A variable plan can be great for someone who uses little energy during times of peak demand.

In order to save money with this type of rate, you have to be familiar with your seasonal usage.

Index-Rate Plan

Indexed plans also have a rate that changes, but it changes by the time of day.

Each plan is different, but we can take Cindy’s plan as an example:

Cindy signed up for an index-rate plan that has a higher rate during peak hours like evenings and weekends when people are expected to be at home.

Since she works in the evenings and on weekends, she can save money with this type of plan because she is charged a lower rate during the times of day when she is home.

Unfortunately, indexed plans also have fine print that is important to understand.

Sometimes there is a minimum usage requirement that will prevent you from saving money at the end of your billing cycle.

Prepaid Plan

Prepaid plans can be good options for individuals who are in transition.

They are pay-as-you-go plans in which you fund your account before you use electricity. You refill your account as it gets depleted over time.

As with all plans, there are several pros and cons.

Pros:

• Flexible options, you can reload at any time
• No bill at the end of the month
• You can keep up with your usage and budget easier
• Usually, there is no down payment or credit check

Cons:

• You might be paying a higher rate per kWh for the convenience
• Minimum balances
• Penalty fees for going below your minimum
• Fine print and cancellation penalties

How Do I Pick the Right Type of Electricity Plan in Texas?

The easiest way to choose the best electricity plan in Texas is through Power Wizard.

If you try to search manually through hundreds of options, you will find that the process is very extensive and exhausting. You might end up getting tired and choosing a plan that doesn’t save you the most amount of money per month.

Power Wizard’s unbiased algorithm scans all the plans in Texas at once. Our system knows what plan will work best for your home and usage requirements.

5 Ways to Keep Your Cost Per Kilowatt Hour Low in Texas

As you’ve learned in this article, there are many factors that go into your final electricity bill amount.

The bottom line is affected by your home and usage.

Using Power Wizard’s service is a great way to save money on your bill since we keep an eye on your rate and make sure you’re always on the best plan.

If you’re looking for other ways to save energy, here are a few tips:

1. Turn The Lights Off To Save On kWh

The most straightforward way to save electricity in your home is to simply turn off the lights and appliances when you’re not using them.

2. Fill Your Dishwasher Every Time To Save On kWh

Your dishwasher uses the same amount of electricity whether it’s filled with dishes or not. Remember to wait until all the dishes are in before turning on the cycle.

3. Use Fans Instead Of A/C To Save On kWh

Air conditioning is one of the most expensive ways to use electricity in your home. If you can feel comfortable by using fans instead, this is a great way to save energy.

4. Use Window Shades In The Summertime To Save On kWh

In the warmer months, the sun will heat your home from outside and your air conditioning may struggle to keep the temperature down. If you block your windows with shades or blinds, it can help keep costs down.

Many people opt to install solar screens on their windows, which can greatly reduce the number of UV rays that enter your home.

5. Upgrade Your Thermostat To Save On kWh

Thermostats with old technology aren’t as accurate in cooling and heating your home. It is worthwhile to upgrade your thermostat in order to save money on your energy bill every month.

6. Upgrade Your Lightbulbs To Save On kWh

Halogen and LED light bulbs are more expensive than incandescent bulbs, but they save on energy and last longer.