Texas Electricity Glossary

Texas electricity has its own language — EFLs, TDUs, REPs, bill credits, load zones. This glossary defines the terms that appear on your bill, on plan comparison sites, and in PUCT filings, in plain English. Each entry links to a full explanation with real Texas examples.

Market & Regulation

ERCOT

Electric Reliability Council of Texas — the independent grid operator that manages electricity flow across ~90% of Texas and runs the wholesale energy market that retail providers buy from.

PUCT

Public Utility Commission of Texas — the state regulator that licenses REPs, approves TDU tariffs, enforces consumer protection rules, and oversees the Power to Choose marketplace.

Deregulated Electricity

A market structure where you choose your electricity supplier. About 85% of Texas (all ERCOT territory outside municipal utilities) is deregulated, meaning you can switch REPs without moving.

REP (Retail Electric Provider)

A PUCT-licensed company that sells electricity to consumers, handles billing, and procures power on the wholesale market. You choose your REP — your TDU is assigned by address.

Power to Choose

The official PUCT-run comparison website (powertochoose.org) that lists every available retail electricity plan for any Texas ZIP code. All REPs are required to submit their plans here.

POLR (Provider of Last Resort)

A REP designated by PUCT to take on customers when their REP exits the market. POLR rates are typically higher than competitive plans, so finding a new REP quickly saves money.

Your Bill & Rates

EFL (Electricity Facts Label)

A mandatory one-page disclosure attached to every Texas electricity plan. It shows the exact price per kWh at 500, 1,000, and 2,000 kWh usage — the three figures TexasPowerCost.com uses to calculate your true bill.

TDU Charge

The regulated fee for physically delivering electricity to your home — separate from the energy rate your REP charges. Your TDU is determined by address (Oncor, CenterPoint, AEP Texas, or TNMP) and cannot be changed by switching providers.

TDSP

Transmission and Distribution Service Provider — the technical term for TDU. Both terms appear on Texas electricity bills; they mean the same thing.

kWh (Kilowatt-hour)

The unit used to measure electricity consumption and set electricity rates. One kWh = one kilowatt of power used for one hour. A typical Texas home uses 1,100–1,400 kWh per month.

Effective Rate

Your real average cost per kWh once all base charges, bill credits, and fees are included — as opposed to the advertised rate, which is only accurate at one specific usage level (usually 1,000 kWh).

Bill Credit

A conditional discount applied when monthly usage hits a specific threshold. A plan advertising "7.9¢/kWh" with a "$50 credit at 1,000 kWh" may be cheaper or more expensive than it appears depending on your actual usage.

Minimum Usage Fee

A charge triggered when consumption falls below a plan's threshold — for example, $9.95 if you use less than 500 kWh in a month. Common on plans marketed with low advertised base rates.

Demand Charge

A fee based on peak power draw (kW) rather than total usage (kWh). Standard in commercial electricity but emerging in some Texas residential plans linked to smart meter interval data.

Plan Types

Fixed-Rate Plan

The most common plan type in Texas. The energy charge per kWh stays constant for the contract term (typically 12–24 months), giving you protection from wholesale price spikes. An ETF applies if you cancel early.

Variable-Rate Plan

Your per-kWh rate changes each month based on market conditions. No ETF, no long-term commitment — but rates can spike dramatically during extreme weather events like Winter Storm Uri.

Indexed Plan

A plan where the rate tracks a published index (e.g., ERCOT day-ahead prices) plus a fixed adder. More transparent than a standard variable plan but still fluctuates month to month.

Prepaid Electricity Plan

Pay-as-you-go electricity with no credit check, no deposit, and no long-term contract. You load funds in advance; the balance depletes daily based on actual usage. Service disconnects automatically at zero balance.

Free Nights Plan

Charges $0/kWh during defined off-peak nighttime hours (typically 9 pm – 6 am) but higher rates during the day. Valuable for households that can shift high-usage appliances (EV charging, dishwasher, laundry) to overnight.

Contracts & Switching

ETF (Early Termination Fee)

A penalty for cancelling a fixed-rate plan before the contract end date. PUCT caps residential ETFs at $20 × months remaining (e.g., $120 with 6 months left). Always check the EFL before signing.

Smart Meter

A digital meter installed by your TDU that records usage in 15-minute intervals and transmits data automatically. Smart meters enable time-of-use pricing, faster outage detection, and usage alerts.

YRAC (Yearly Rolling Average Credit)

A credit mechanism used by some indexed plans to smooth volatility by averaging the ERCOT settlement price over a trailing 12-month window. Reduces the impact of short-term price spikes.

Grid & Renewable Energy

Load Zone

One of ERCOT's four pricing regions — Houston, North, South, and West — that determines wholesale settlement prices based on local grid congestion. Your ZIP code determines your load zone.

REC (Renewable Energy Certificate)

A tradeable certificate proving that 1 MWh was generated from a renewable source. Texas REPs purchase RECs to legally offer "100% renewable" plans, even if the electrons delivered aren't physically from a wind turbine.

Net Metering Texas

A billing arrangement for rooftop solar owners where excess electricity sent to the grid earns a credit against future bills. Texas does not mandate net metering statewide — policies vary by utility and REP.

Full Glossary by Category

200+ additional terms organized by topic — billing fees, rate structures, market mechanics, grid infrastructure, renewable energy, customer rights, and more.