What Happens When Your Texas Electricity Contract Ends
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
You signed a 12-month fixed plan, locked in a good rate, and forgot about it — exactly as intended. Then twelve months pass, and one day a bill arrives that's half again as large as last month's, for the same electricity. Nothing broke. Your contract quietly ended, and your provider did what Texas rules allow: it rolled you onto a month-to-month variable rate it sets itself. This is the single most expensive thing that happens to Texas electricity customers who do nothing, and avoiding it costs you about ten minutes once a year.
The short answer
When a fixed Texas contract ends, your service continues but you're automatically moved to a default variable rate — the "holdover" rate — which the provider can change month to month and which is typically far higher than competitive fixed rates. Your provider must mail you an expiration notice beforehand, and you get a no-fee switching window at the end of the term. The fix is to actively pick a new fixed plan before the term lapses. Set a reminder 45 days out — and before you lock, check whether Texas fixed rates are trending up or down so you pick the right term.
Why the Holdover Rate Exists
When you sign a fixed-rate plan, the provider commits to a locked price for a set number of months. When that term ends, the contract is simply over — but your home still needs power, and disconnecting you would be both impractical and against the rules. So Texas allows the provider to keep serving you on a default month-to-month arrangement. Because there's no longer a contract, there's also no locked price: the provider sets a variable rate at its own discretion and can adjust it each billing cycle.
From the provider's side, this is the most profitable customer it has — someone paying an unnegotiated rate with no commitment, who isn't shopping. There's no malice required; the system simply rewards inattention. The holdover rate is the default, and defaults are powerful.
How big is the jump?
Holdover variable rates routinely run 1.5 to 2 times the competitive fixed rates on the open market. A household that was paying 13¢/kWh on a fixed plan can find itself at 20–26¢ the month after it expires — and higher still if the switch happens during a wholesale price spike. On a 1,500 kWh summer bill, that's roughly an extra $100–$200 a month for doing nothing.
What Your Provider Must Tell You
You aren't left entirely in the dark. PUCT rules require your retail electric provider to send a written contract-expiration notice before your fixed term ends. That notice has to tell you the expiration date and what your rate will become if you do nothing — usually the default variable or month-to-month product.
The catch is that the notice is easy to miss. It often arrives as a bill insert, a line in a statement, or an email that looks like routine account mail. Households that miss it aren't careless so much as busy — the message competes with everything else in the mailbox. Knowing the notice is coming, and roughly when, is half the battle.
The Timeline: When You Can Act Without a Fee
The good news is that Texas gives you a clean, no-penalty path out — if you use it. Two windows matter:
| When | What applies |
|---|---|
| Mid-contract | Switching usually triggers an early termination fee (often $150–$295, or a per-remaining-month amount). |
| Final ~14 days of the term | Texas rules let you switch with no early termination fee — the end-of-contract switching window. |
| After expiration (holdover) | No contract, so no ETF to leave at all — but you're paying the high variable rate every day until you switch. |
The practical takeaway: you never have to pay a fee to leave at the natural end of your contract. The only cost is the variable rate you rack up if you let the term lapse and then take weeks to act. Switching isn't instant — it takes effect on your next meter read — so the earlier you line up the new plan, the smaller the gap.
Smart move
Set a calendar reminder for 45 days before your contract end date. That's enough runway to compare the whole market, pick a plan, and have the switch land inside the no-fee window — without a panicked decision when the first high bill shows up.
Renew or Switch? Don't Confuse the Two
When your provider sends its expiration notice, it will usually include a renewal offer — a new fixed rate if you re-sign. Renewing is perfectly fine, but treat the renewal rate as one option among many, not the benchmark. Providers know that the path of least resistance is to re-sign, and the renewal rate isn't always the provider's most competitive one. Compare it against every plan available in your ZIP at your real usage before you accept.
And whichever you choose, read the new Electricity Facts Label the same way you'd read any plan. A renewal can carry a bill credit tuned to 1,000 kWh or a minimum-usage fee just like a new plan from anyone else — the fact that it's your current provider doesn't make the label any less worth reading. Our EFL guide walks through exactly what to check, and if the renewal offers several term lengths, which contract length is best compares today's rates by term and the end month each one produces.
The Renewal That Hits Renters Hardest
The holdover trap is worst for people who move often — students, military families, anyone on a 12-month lease. A plan signed when you moved in expires right around the time you're busiest, and the variable rate kicks in during a Texas summer when usage is already peaking. If you're in a college town or near a base, this is the classic way a final-semester or PCS-season electricity bill balloons. The fix is the same: know your end date, and switch inside the window.
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Compare Plans Before I Renew →How to Avoid the Holdover Rate, Step by Step
- Find your contract end date now. Check your EFL, your latest bill, or your online account for the exact expiration date. Do this before you need it — not when the high bill arrives.
- Set a reminder 45 days before expiration. That gives you time to compare plans and switch inside the no-fee end-of-contract window without rushing.
- Compare the whole market, not just your renewal offer. Your provider's renewal rate is one option, not the benchmark. Compare it against every plan in your ZIP at your real usage.
- Switch or renew before the term ends. Lock a new fixed plan during the final-days switching window so you are never exposed to the month-to-month holdover variable rate.
- Confirm the switch completed. Switches take effect on your next meter read. Verify the new plan is active so you do not drift onto the default rate in the gap.
Common Questions
What happens when my Texas electricity contract ends?
Your service does not stop. Instead, your provider automatically moves you onto a default month-to-month plan — usually a variable rate the provider sets at its own discretion. This holdover rate is frequently far higher than the fixed rate you were paying, and it can change every month. You stay on it until you sign a new contract or switch providers.
How much higher is the holdover variable rate?
It varies by provider and month, but holdover variable rates are routinely 1.5 to 2 times the competitive fixed rates available on the open market, and during wholesale price spikes they can climb higher. Because there is no contract, the provider can raise it month to month with only the notice required by PUCT rules.
Will my provider warn me before my contract expires?
Yes. PUCT rules require your retail electric provider to send at least one written contract-expiration notice before your fixed term ends, disclosing the date and what your default rate will become. The notice is real but easy to miss — it often arrives as an insert or email among ordinary bills, which is exactly why so many households slide onto the holdover rate without noticing.
Is there an early termination fee if I switch right at the end?
No. Texas rules give you a switching window at the end of your contract — typically the final 14 days before expiration — during which you can switch with no early termination fee. After expiration, you are month-to-month with no fee to leave at all. The ETF only applies if you leave in the middle of a fixed term.
Do I have to switch providers, or can I just renew?
Either works. You can sign a new fixed contract with your current provider (a renewal) or switch to a different provider. The important thing is to actively choose a new fixed plan rather than letting the contract lapse into the variable holdover rate. Always compare the renewal offer against the wider market — your provider's renewal rate is not always its best rate.
How do I know exactly when my contract ends?
Check your Electricity Facts Label or your most recent bill, which states the contract end date, or log into your provider account. Set a reminder for about 45 days out so you have time to compare plans and switch inside the no-fee window.
Key Terms
Variable-Rate Plan · Fixed-Rate Plan · Early Termination Fee · Electricity Facts Label (EFL) · Retail Electric Provider · Effective Rate · Full Glossary →
Keep Reading
Once you've avoided the holdover trap, two guides help you choose what comes next: how to read a Texas EFL shows you how to vet any renewal or new plan on the label, and tips for switching Texas providers covers the mechanics of a clean, gap-free switch. And The 1,000 kWh Illusion explains why the cheapest-looking renewal rate often isn't. When you're ready, the ZIP search tool ranks every plan in your area by your true bill.