Every Texas Electricity Plan Type, Explained

By the TexasPowerCost Editorial Team — independent Texas electricity analysis · Last reviewed October 18, 2026 · how we analyze plans

Last updated: October 18, 2026  ·  9 min read

Open Power to Choose and you'll see at least ten different plan structures: fixed, variable, indexed, prepaid, time-of-use, free nights, free weekends, bill credits, tiered, green. They look almost identical at first glance. They produce wildly different monthly bills at the same usage level. This guide tells you what each one really does and which household profile it actually fits.

Fixed-Rate Plans — The Default Choice for Most Texans

A fixed-rate plan locks the energy charge per kWh for the entire contract term — usually 12 or 24 months. The TDU delivery charges and base fees still pass through, but the energy rate doesn't move regardless of what happens in the wholesale market.

This is the right default for most households. It protects against summer price spikes, blocks Winter Storm Uri-style wholesale events from reaching your bill, and makes budgeting straightforward. The trade-off is that if wholesale prices drop sharply during the contract, you're stuck at the higher rate. Early termination fees of $150 to $295 typically apply if you bail early — but you can switch in the final 14 days of the contract with no fee.

Variable-Rate Plans — The Trap Most People Don't Know They're In

A variable-rate plan has an energy charge that can change month to month at the provider's discretion. They give notice before raising it. You have no protection against the increase except switching plans. Most variable plans have no early termination fee, which is the bait.

Here's the catch: most Texans on variable-rate plans didn't sign up for one. Their original fixed contract expired, they didn't act on the renewal notice, and they got rolled onto the "holdover" rate — technically a variable rate, almost always much higher than what they were paying before. If your bill jumped 30% to 70% in the last few months and your plan name has the word "Month-to-Month" or "Choice" in it, this is what happened.

Indexed-Rate Plans — A Wholesale Gas Bet

An indexed-rate plan ties your energy charge to a published benchmark, almost always the Houston Ship Channel natural gas price. When gas is cheap, you pay less than fixed-rate customers. When gas spikes — winter freezes, summer heat waves, supply disruptions — you pay much more.

Indexed plans were the structural source of the multi-thousand-dollar bills that hit a small number of Griddy customers during Winter Storm Uri in February 2021. The Griddy product was an extreme case, but every indexed plan carries some version of the same risk. Unless you actively follow natural gas markets and have financial cushion for a surprise bill, this is not the plan type for you.

Prepaid Electricity Plans

A prepaid plan requires you to fund the account in advance. Electricity is drawn down as you use it. You get daily balance text or email alerts; when the balance runs low, you add more or service disconnects. No credit check. No deposit.

Prepaid plans suit customers who can't pass a credit check, don't want a deposit, or prefer pay-as-you-go discipline. The per-kWh rate runs 1 to 3 cents higher than equivalent postpaid plans — that's the cost of skipping the credit step. Providers focused on prepaid: Payless Power, Acacia Energy, Snap Energy.

Free Nights and Free Weekends Plans

Time-of-use plans charge different rates by hour. The popular Texas variants are "free nights" (energy used between roughly 8 PM and 6 AM is free or near-free, daytime rate is much higher) and "free weekends" (same idea, Saturday through Sunday). The economics only work if you can genuinely shift load into the free window. Our free nights & weekends deep dive works the break-even math in full.

Variant	Free Window	Daytime Penalty	Best For
Free Nights	~8 PM – 6 AM	+30% to +60%	EV owners, night-shift workers
Free Weekends	Sat–Sun all day	+20% to +40%	Households empty all week
Three-Tier TOU	Off-peak / mid / on-peak	Variable	Smart-home users, solar owners

Bill-Credit Plans — How Texas Marketing Works

A bill-credit plan offers a flat dollar credit when your monthly usage falls in a specific range — often $50 or $100 credit if usage is between 1,000 and 2,000 kWh. Below the threshold, no credit. Above the upper bound, the credit often disappears and the per-kWh rate jumps.

This is how providers manufacture an attractive "1000 kWh rate" on Power to Choose. The plan looks excellent at exactly 1,000 kWh and average-to-bad at 800 kWh or 1,300 kWh. Texas households whose usage swings between 600 kWh in February and 2,000 kWh in August can pay the worst effective rate twice on the same plan — once for falling below the threshold, once for going above it.

Tiered-Rate Plans

A tiered plan uses different per-kWh rates at different usage tiers. Example: 9¢/kWh for the first 500 kWh, 11¢/kWh from 500 to 1,000 kWh, 13¢/kWh above that. Some tiered plans go the opposite direction, with a punitive tier above 2,000 kWh.

Tiered plans are less common than they used to be. The relevant question for any tiered plan is where the tier breaks sit relative to your real usage. If your bill hovers right at a tier break each month, small fluctuations can swing your effective rate noticeably.

Green / 100% Renewable Plans

A green plan supplies you with Renewable Energy Credits (RECs) covering all or part of your consumption. A 100% renewable plan retires one REC for every kWh you use; a 50% wind plan retires half as many. The electricity itself comes from the same mixed-source ERCOT grid — RECs are an accounting mechanism that ensures your consumption is matched by renewable generation somewhere on the system.

Because Texas leads the country in installed wind (and is now among the top three states for solar), RECs are inexpensive. The premium for a 100% renewable plan is typically a fraction of a cent per kWh. For households that value verifiable renewable sourcing, the cost is small. Renewable energy in Texas — the honest guide goes deeper on what these plans actually buy.

The Texas-Specific Bottom Line

Default to a 12-month fixed-rate plan with no bill credit and no minimum-usage fee. Move to a free-nights plan only if you can credibly shift 25%+ of your usage overnight (EV owners, pool owners, night-shift households). Treat indexed plans as a wholesale gas bet you probably don't want to make. Never let a fixed-rate contract auto-renew into the holdover rate — shop 30 days before expiration. And whatever plan you pick, verify its real cost at your usage level, not at the marketing-friendly 1,000 kWh number.

Common Questions Texans Ask

Which Texas electricity plan type is best for most people?

For most Texas households using 800 to 1,500 kWh a month, a 12-month fixed-rate plan with no bill credit and no minimum-usage fee produces the most predictable bill. It locks in the per-kWh rate, protects against summer price spikes, and avoids the structural traps in bill-credit and free-nights plans.

Are bill-credit plans actually cheaper?

Only at the specific usage level the credit is designed for, almost always exactly 1000 or 2000 kWh. Below or above that threshold, the effective per-kWh rate climbs sharply. If your usage swings 600 to 2,000 kWh across the seasons — common in Texas — a flat per-kWh plan usually beats a bill-credit plan over a full year.

Do free nights plans really save money?

Only if you can genuinely shift more than about a quarter of your monthly consumption into the free overnight window — usually 8 PM to 6 AM. The "free" energy is funded by a much higher daytime rate. EV owners who charge overnight, night-shift workers, and households running pool pumps overnight can win. Daytime households almost always lose money on these plans.

What is an indexed-rate plan and should I avoid one?

An indexed-rate plan ties your energy charge to a wholesale benchmark — usually the Houston Ship Channel natural gas price. The rate changes monthly. Indexed plans look cheap when gas is cheap and get painful during winter freezes and summer heat domes. Avoid them unless you actively follow energy markets and have financial cushion for surprise bills.

Should I sign a 12-month or 24-month contract?

Pick the longer term when rates are at historical lows; pick the shorter term when rates are elevated and likely to soften. As of October 2026, the spread between 12- and 24-month plans is usually under 1 cent per kWh. If you cannot decide, default to 12 months — you preserve the option to shop again sooner.

What happens when my fixed-rate contract ends?

Your plan rolls onto a "holdover" or month-to-month variable rate that is almost always 30% to 100% higher than the contract rate. Providers must send a notice 30 to 60 days before expiration. The fix is to shop and switch before the contract ends — switching within 14 days of expiration carries no early termination fee.

Are 100% renewable plans much more expensive?

Not in Texas. Because Texas leads the country in wind generation, Renewable Energy Credits (RECs) are cheap. A 100% renewable plan typically costs 0 to 0.5 cents per kWh more than an equivalent traditional plan from the same provider — pennies a month for a typical household.

Are prepaid electricity plans a good idea?

They suit specific situations: customers who cannot pass a credit check, who want no deposit, or who prefer the discipline of paying as they go. The per-kWh rate runs 1 to 3 cents higher than equivalent postpaid plans — that's the cost of skipping the credit check. For most households with normal credit, a fixed-rate postpaid plan is cheaper.

Key Plan Terms — Glossary

Quick definitions for every plan type covered above:

Fixed-Rate Plan · Variable-Rate Plan · Indexed Plan · Prepaid Plan · Free Nights Plan · Bill Credit · ETF · Effective Rate · Minimum Usage Fee · EFL · REC · All Rate Types →

Your Next Move

Run a search on the homepage with your ZIP and home size — you'll see every plan in your area ranked by what it actually costs at your usage. To understand the structural reasons advertised rates mislead, read the comparison methodology guide. To see the TDU charge layer that sits on top of every plan, see Texas TDU delivery charges, fully explained. To switch cleanly once you've picked, the switching tips guide walks through enrollment without surprises.