YRAC — Yearly Rolling Average Credit
Texas Electricity Glossary
YRAC (Yearly Rolling Average Credit) is a pricing mechanism used by some Texas indexed electricity plans that sets your monthly rate based on the trailing 12-month rolling average of ERCOT settlement prices rather than the current month's spot price. By smoothing price inputs across 12 months, YRAC significantly reduces the month-to-month rate volatility inherent in standard indexed plans while preserving some relationship to the underlying wholesale market.
How YRAC Works
Each month, the plan calculates the average ERCOT settlement price across the prior 12 months. That average — plus the REP's fixed adder — becomes your rate for the current billing period. As each new month's data replaces the oldest month in the 12-month window, the rate adjusts gradually.
YRAC vs. spot-indexed during a price spike
Suppose ERCOT averages 20¢/kWh in February due to a winter storm, vs. a 12-month trailing average of 7¢/kWh.
Spot-indexed plan: February bill uses 20¢/kWh → massive spike
YRAC plan: February rate is still near 7¢/kWh (prior 12-month average), then edges up slightly as the high-cost month enters the rolling window → small, gradual adjustment over the following year
YRAC vs. Fixed vs. Standard Indexed
| Feature | Fixed | YRAC Indexed | Spot Indexed |
|---|---|---|---|
| Rate stability | Full lock | Gradual change | High volatility |
| Spike protection | Full | Dampened (1/12 per month) | None |
| Market transparency | None | High | High |
| Benefit from price drops | No | Gradually | Immediately |
Who YRAC Plans Suit
YRAC plans work well for customers who want some link to the wholesale market — perhaps believing long-run prices will stay low — but cannot tolerate the extreme volatility of a spot-indexed plan. They are not appropriate for risk-averse households for whom a sudden multi-month rate increase would be financially stressful.
Related Terms
- Indexed Plan — the broader category that includes YRAC plans
- Variable-Rate Plan — no index transparency; rate set at REP's discretion
- Fixed-Rate Plan — full price lock; most protection
- ERCOT — the market whose settlement prices the YRAC tracks
Frequently Asked Questions
What does YRAC stand for in Texas electricity?
YRAC stands for Yearly Rolling Average Credit. It is a pricing mechanism used by some Texas indexed electricity plans that calculates your monthly rate based on the trailing 12-month average of ERCOT settlement prices, rather than the current month's spot price. This reduces month-to-month rate volatility while still allowing you to benefit from long-term price trends.
Is a YRAC plan safer than a standard variable plan?
Yes — YRAC plans are significantly more stable than plans that track real-time ERCOT prices. Because YRAC averages prices over 12 months, a single extreme weather event like Winter Storm Uri raises your rate by roughly 1/12th of the event's impact, spread across the following year, rather than hitting your bill fully in the month of the event. However, YRAC plans are still indexed — they are not as stable as a fixed-rate plan.
Does a YRAC plan have an early termination fee?
YRAC plans vary by provider. Some are structured as month-to-month plans with no ETF; others include a contract term with an ETF. Check the EFL for the specific plan you are considering. Because YRAC is an indexing mechanism rather than a contract type, it can be found in both contracted and contract-free products.