New to Texas Electricity? Deregulation Guide for Newcomers

If you are moving from another state, Texas electricity will surprise you. In most of America, you have one utility company—you call them, they turn on power. Texas deregulated its electricity market in 2002 under Senate Bill 7, creating competition among over 100 retail providers. About 85% of Texas (the ERCOT region) offers energy choice. This means you must actively choose a provider before move-in day. There is no default utility to call. This might feel overwhelming at first, but it means you can shop for competitive rates, green energy options, and plans that match your usage patterns—benefits monopoly customers never see.

Understanding Texas electricity requires knowing three entities: First, ERCOT (Electric Reliability Council of Texas) manages the power grid itself—they ensure supply meets demand but do not sell you electricity. Second, your TDU (Transmission and Distribution Utility) owns the power lines, poles, and meters. Major TDUs include Oncor (Dallas-Fort Worth), CenterPoint (Houston), AEP Texas (South Texas), and TNMP (scattered areas). You cannot choose your TDU—it depends on your address. Third, your REP (Retail Electric Provider) buys electricity wholesale and sells it to you retail. You choose your REP, and they handle your billing, customer service, and rate plans.

Start at Power to Choose (powertochoose.org), the official state comparison website run by the Public Utility Commission. Enter your ZIP code to see every plan available at your new address. Plans show prices at three usage levels: 500, 1,000, and 2,000 kWh per month. Texas averages about 1,100 kWh monthly, but new arrivals from cooler states often underestimate summer usage—consider 1,500-2,000 kWh if moving before summer. Filter by term length (6-36 months), rate type (fixed or variable), and renewable content. Each plan has an EFL (Electricity Facts Label)—a standardized document showing the true cost breakdown. Read it carefully.

Fixed-rate plans lock your price per kWh for the contract duration—great for budgeting. Variable-rate plans float with the wholesale market—potentially cheaper in spring/fall but risky during summer peaks. Indexed plans tie to a specific benchmark. Free nights and weekends plans offer zero-cost electricity during off-peak hours (typically 8pm-6am or all weekend) with higher daytime rates. Green energy plans source some or all electricity from renewable sources, often at a slight premium. Time-of-use plans vary rates by hour—cheap overnight, expensive mid-afternoon. As a newcomer, start with a simple 12-month fixed-rate plan to learn your usage patterns, then optimize later.

The EFL is your most important tool for comparing plans honestly. It shows: Average price per kWh at 500, 1,000, and 2,000 kWh usage (including all fees). Base charges and minimum usage fees—some "cheap" plans have $10-15 monthly base fees that inflate costs for low users. Energy charge rate—the actual per-kWh price before TDU charges. Early termination fees—typically $150-200 for breaking contract early. Contract term and renewal terms. Renewable energy percentage. TDU charges are the same for all REPs in your area—do not be fooled by plans hiding behind "low energy charge" while having high total costs.

Texas homes use more electricity than the national average—about 1,100 kWh monthly compared to 880 nationally. Why? Long, hot summers require serious air conditioning (often running March through November). Homes are larger on average. Many areas lack access to natural gas, so cooking, water heating, and even heating use electricity. If you are moving from the Northeast or Pacific Northwest, expect your summer bills to be 50-100% higher than what you paid before. A 2,000 sq ft Texas home might use 1,500-2,000 kWh in July and August. Budget accordingly and choose plans rated for your expected consumption level.

One to two weeks before your move: Enter your new ZIP code on Power to Choose and compare plans. Select 2-3 candidates and read their EFLs carefully. Choose based on your estimated usage (err higher for summer arrivals). Enroll online—it takes about 10 minutes. Provide your new address, ID, and payment information. Most plans require credit check; prepaid plans skip this step. Schedule your start date to match your move-in. After enrollment, you will receive confirmation within hours. Register on Smart Meter Texas with your ESID (meter number) to track daily usage. Download your REP's app for easy bill payment and usage monitoring.

First surprise: there is no default utility to call. You must choose. Second: TDU charges appear on your bill but are not controlled by your REP—they are pass-through charges. Third: rates advertised as "8 cents" might actually cost 11-12 cents after TDU charges and fees—always check the EFL. Fourth: summer bills shock everyone the first year. Fifth: your REP handles billing but calls the TDU for outages—know both phone numbers. Sixth: contracts auto-renew at much higher rates if you forget to shop before they expire. Set calendar reminders 30 days before your contract ends. Welcome to Texas—once you understand the system, you will appreciate the competition and choices.