The 1,000 kWh Illusion: Why the "Cheapest" Texas Electricity Rate Usually Isn't
By the TexasPowerCost Editorial Team — independent Texas electricity analysis · Last reviewed October 18, 2026 · how we analyze plans
Last updated: October 18, 2026 · 7 min read
The 1,000 kWh illusion, in brief
The 1,000 kWh illusion is the gap between a Texas electricity plan's advertised average price per kWh — which is always quoted at exactly 1,000 kWh of monthly usage — and what you actually pay at your real usage. Providers engineer plans with bill credits, minimum-usage fees, and base charges to win the 1,000 kWh sort on Power to Choose, so the plan that looks cheapest at that single point is frequently one of the most expensive at 900 or 1,700 kWh. The only reliable fix is to compare each plan's effective rate at your own usage, not the advertised number.
Key takeaways
- The advertised "1,000 kWh rate" is a marketing benchmark, not a prediction of your bill.
- A bill credit that only triggers at 1,000 kWh can make the effective rate jump by roughly a third if you use slightly less.
- Texas summer/winter swings mean one plan can look cheap at your average month yet cost the most at your peak and your trough.
- To find your true cheapest plan, rank plans by effective rate at your actual usage — interpolated across the 500, 1,000, and 2,000 kWh EFL price points.
Almost every Texas electricity plan is advertised with a single number: the average price per kWh at 1,000 kWh of monthly usage. It is the figure on every comparison site, the default sort on the state's Power to Choose portal, and the one providers compete hardest to win. There is just one problem: real Texas homes almost never use exactly 1,000 kWh, and the plan that looks cheapest at that one point is frequently one of the most expensive at the usage you actually have.
Across the Texas cities we analyze, a large home using ~2,000 kWh that picks the fixed-rate plan advertised cheapest at 1,000 kWh pays roughly $57 more per month — on the order of $686 a year than the fixed-rate plan that's actually cheapest at its usage. In nearly every city, those are two different plans.
The illusion, proved on today's actual Texas plans
This is not a thought experiment. Across the 291 standard fixed-rate plans currently filed in Texas (synced October 18, 2026), the cheapest plan for a small home and the cheapest plan for a large home are two different plans — right now:
| If you use… | The genuinely cheapest plan is… | Effective rate | Energy cost / month |
|---|---|---|---|
| 600 kWh small home / apartment |
SOUTHERN FEDERAL POWER LLC SoFed Try Us Out - 3 |
9.9¢ | $59.40 |
| 2,000 kWh large / all-electric home |
AP GAS & ELECTRIC (TX) LLC Bonus Saver 3 |
8.5¢ | $170.00 |
A large home that signs the small-home winner — a perfectly reasonable thing to do, since it looks cheapest on the sort — pays about $74.00 more per month, roughly $888 a year, for the identical electricity.
Standard fixed-rate plans only (variable and time-of-use structures are excluded, because their EFL averages assume a usage shape a flat profile does not have). Energy-supply charge only; TDU delivery is identical across providers and does not change which plan wins. Computed from filed EFL price points via Real-Rate Interpolation.
Why 1,000 kWh Became the Magic Number
Every Texas plan ships with an Electricity Facts Label (EFL), a one-page disclosure mandated by the Public Utility Commission of Texas. The EFL lists the average price per kWh at exactly three usage levels: 500, 1,000, and 2,000 kWh. Of those three, the 1,000 kWh figure became the headline everyone advertises and the default sort key on Power to Choose.
Once a single number decides who ranks first, the market optimizes for that number. Providers design plans specifically to win the 1,000 kWh sort — even when doing so makes the plan worse at every other usage level. The result is a benchmark that is gamed by design.
How the Advertised-Rate Trap Works: A Worked Example
Compare two plans. Plan A charges 16¢/kWh for energy but gives a $40 bill credit in any month you use 1,000 kWh or more. Plan B is a plain 13.5¢/kWh flat rate with no credit. Here is the effective rate each one actually delivers at different usage levels:
| Monthly usage | Plan A (16¢ + $40 credit ≥1,000) | Plan B (flat 13.5¢) | Cheaper plan |
|---|---|---|---|
| 500 kWh | $80.00 → 16.0¢ | $67.50 → 13.5¢ | Plan B |
| 900 kWh | $144.00 → 16.0¢ | $121.50 → 13.5¢ | Plan B |
| 1,000 kWh (advertised) | $120.00 → 12.0¢ | $135.00 → 13.5¢ | Plan A ⚠ |
| 1,400 kWh | $184.00 → 13.1¢ | $189.00 → 13.5¢ | Plan A |
| 2,000 kWh | $280.00 → 14.0¢ | $270.00 → 13.5¢ | Plan B |
The illusion in one line
Plan A wins at exactly 1,000 kWh — and only at 1,000 kWh. At 900 kWh it costs 16.0¢ versus Plan B's 13.5¢: nearly 19% more, for using less electricity. A shopper who sorts by the advertised rate picks Plan A, then overpays in most real months — it's the single biggest reason your bill comes in higher than the advertised rate.
On its EFL, Plan A's three published averages would read 16.0¢ / 12.0¢ / 14.0¢ — a distinctive "V" that dips only at the 1,000 kWh marker. That V is the fingerprint of a plan engineered for the sort, not for your bill. Plan B's EFL reads a flat 13.5¢ / 13.5¢ / 13.5¢. Power to Choose, sorting by the middle number, puts the more expensive-for-you plan on top.
And here is that exact "V" on a plan filed in Texas today
Texans Choice Power LLC Texas Instant 12 (12-month) advertises 13.5¢ at 1,000 kWh. Bill 1,000 kWh on it and you pay $135.00. Bill 950 kWh — 50 kWh less — and you pay $141.08, an effective 14.9¢. Using less electricity costs $6.08 more. Plan A is not a hypothetical; it is how a large part of this market is built.
Conservatively stated: interpolation treats an all-or-nothing credit as a gradual ramp, so the real penalty for missing the threshold is larger than the figure above. See this plan's month-by-month projection →
Why Texas Usage Makes This Worse
In many states this would be a minor quirk. In Texas it is a trap, because summer and winter usage are wildly different. A 2,000-square-foot Houston home might pull 1,800 kWh in August with the AC running and 850 kWh in a mild January. On a bill-credit plan tuned for 1,000 kWh, that household can land on the wrong side of the credit in both peak summer and mild winter — paying the worst effective rate twice a year on the plan it chose because it looked cheapest.
Smart move
Before you sign, check a plan at your highest and lowest realistic month, not just your average. A plan is only a good deal if it stays competitive across your whole seasonal range.
How to See Through It
The fix is simple to state and tedious to do by hand: instead of comparing the advertised rate, compute the effective rate — total cost divided by usage — at your usage, for every plan. Because the EFL gives three points (500, 1,000, 2,000 kWh), you can interpolate between them to estimate the real rate at any usage in between. That interpolation is exactly what reveals the V-shaped bill-credit plans and the flat plans hiding underneath them.
This is the whole reason TexasPowerCost exists. Our tool runs that interpolation on every plan in your ZIP and ranks them by what you would actually pay — not the marketing number at 1,000 kWh. The methodology page walks through the exact formula if you want to see the math.
See it live
Compare the cheapest plans for a small apartment (~600 kWh) versus a large home (~2,000 kWh) in Houston — the #1 plan often changes between the two. Swap "houston" for your own city, or just search your ZIP.
See your real cheapest plan in 10 seconds
Enter your ZIP and home size. We compute your true monthly bill on every plan in your area at your actual usage — not the advertised rate at 1,000 kWh.
Find My Real Cheapest Plan →How to Find Your True Cheapest Plan
- Estimate your real monthly usage. Look at 12 months of bills, or use your home size as a starting point. Note that Texas usage swings hard between summer and winter.
- Ignore the advertised 1,000 kWh rate. Treat the headline rate as a marketing number. The figure that matters is the effective rate at your usage.
- Compare effective rates at your usage. Use a tool that interpolates between the 500, 1,000, and 2,000 kWh EFL points to compute the real per-kWh cost at your actual usage for every plan.
- Check both your summer and winter usage. A plan that wins at your average month can lose badly in your peak or trough month. Check the plan across your real seasonal range before signing.
Common Questions
What is the 1,000 kWh illusion?
It is the gap between the advertised "average price per kWh at 1,000 kWh" and what you actually pay at your real usage. Texas providers design plans — using bill credits, minimum-usage fees, and base charges — to make the rate at exactly 1,000 kWh look as low as possible, because that is the number Power to Choose sorts by and every provider advertises. At 850 or 1,700 kWh, the effective rate on the same plan can be dramatically higher.
Why does Power to Choose show the 1,000 kWh rate?
The official Electricity Facts Label (EFL) lists the average price at exactly three usage points: 500, 1,000, and 2,000 kWh. The 1,000 kWh figure became the default headline and the default sort key, so providers optimize plans to win at that single point. It is a marketing benchmark, not a prediction of your bill.
How can a plan be cheapest at 1,000 kWh but expensive at 900 kWh?
A bill credit that only triggers at 1,000 kWh or more is the usual cause. A plan might charge 16¢/kWh but hand back a $40 credit once you cross 1,000 kWh. At 1,000 kWh that credit pulls the effective rate down to 12¢. At 900 kWh the credit never applies, so you pay the full 16¢ — a 33% jump for using slightly less power.
How do I find the plan that is actually cheapest for me?
Estimate your real monthly usage, then compare plans at that usage rather than at the advertised 1,000 kWh. TexasPowerCost interpolates between the three EFL price points to compute your true effective rate and monthly bill for every plan in your ZIP, so the ranking reflects your home, not the marketing number.
Are bill-credit plans always a bad deal?
No. A bill-credit plan can genuinely be the cheapest option — but only if your usage reliably lands in the window where the credit applies, every month, in every season. The danger is seasonal swings: a Texas home using 1,800 kWh in August and 850 kWh in January can land on the worst side of the same plan twice a year.
Key Terms
Effective Rate · Bill Credit · Minimum-Usage Fee · Electricity Facts Label (EFL) · Power to Choose · Full Glossary →
Keep Reading
Once the illusion makes sense, three guides go deeper: how to read a Texas EFL shows you how to spot the V-shaped bill-credit pricing on the label itself, our comparison methodology shows the interpolation math step by step, and how the Texas electricity market works explains the three companies behind every bill. If your home runs hot, the best Texas plans for high-usage homes (2,000 kWh+) applies all of this to big summer bills. For quick, plain-English answers to the questions Texans ask most, see the Texas electricity shopping FAQ. When you are ready, the ZIP search tool does the interpolation for you on every plan in your area.