Fixed-Rate Electricity Plan
Texas Electricity Glossary
A fixed-rate electricity plan locks your energy charge per kWh for the duration of the contract term — typically 12, 24, or 36 months. Your REP cannot raise the energy rate during this period, even when ERCOT wholesale prices spike during extreme weather. In exchange, you commit to an early termination fee (ETF) if you cancel before the contract end date. Fixed-rate plans are the most common plan type in the Texas deregulated market.
What Is and Isn't Fixed
| Component | Fixed? | Notes |
|---|---|---|
| Energy rate (per kWh) | Yes | The core "fixed" component — locked for the contract term |
| TDU delivery charge | No | Set by PUCT; can change if PUCT approves a tariff adjustment |
| Monthly base charge | Usually | Typically fixed per plan terms; check EFL |
| Bill credits | Usage-conditional | Apply only when usage hits the threshold; vary monthly |
| Total monthly bill | No | Changes with actual kWh usage each month |
Fixed-Rate vs. Variable-Rate in Texas
Texas has the most volatile electricity market in the United States due to ERCOT's isolated grid and extreme weather exposure. Fixed-rate plans provide insulation from price spikes. Variable-rate plans offer flexibility and no ETF but expose you to market volatility. The catastrophic billing events following Winter Storm Uri (February 2021) — where some Texans on variable or "indexed" plans received bills of $5,000–$17,000 for a single month — illustrate the risk.
For most Texas households, a fixed-rate plan is the appropriate choice. The premium you pay for price certainty is typically worth the protection.
Finding the Best Fixed-Rate Plan
Compare plans by true monthly cost at your actual usage — not just the advertised rate. TexasPowerCost.com shows projected monthly bills for every fixed-rate plan in your ZIP code, using the three EFL price points and your real usage level. Pay attention to contract length and ETF amount when comparing plans of different term lengths.
Related Terms
- Variable-Rate Plan — the alternative; no ETF, no price protection
- ETF — the penalty for leaving a fixed-rate contract early
- EFL — shows the fixed rate at three usage levels
- Bill Credit — common add-on to fixed-rate plans that affects true cost
- Effective Rate — the real per-kWh cost after all plan components
Frequently Asked Questions
What is a fixed-rate electricity plan?
A fixed-rate electricity plan locks your energy charge per kWh for the duration of the contract term — typically 12, 24, or 36 months. During that period, your REP cannot raise the energy rate even if wholesale ERCOT prices spike. In exchange, you agree to an early termination fee if you leave the contract early.
Is everything fixed on a fixed-rate electricity plan?
No. Only the energy charge (REP's per-kWh rate) is fixed. Your TDU delivery charge is set by PUCT tariff and can change if PUCT approves a rate adjustment during your contract. Fuel charges, franchise fees, and taxes may also vary. The overall bill can still change month to month based on your usage.
Should I choose a fixed or variable rate in Texas?
For most Texas households, a fixed-rate plan is the safer choice. Texas experiences extreme weather events (summer heat waves, winter storms) that can push ERCOT wholesale prices to $5,000/MWh — far above any fixed rate. Variable-rate plans offer flexibility but no price protection. If market prices are currently low and you expect them to stay low, a shorter-term fixed or variable plan may make sense, but this requires predicting market movements.