What Rate Actually Bills Texas Electricity

A family in Plano spots a plan advertised at 9.9 cents per kWh. They sign up, use 1,400 kWh in August, and open a bill for $210. That works out to 15 cents per kWh, not 9.9. Nobody lied to them, exactly. But the advertised number was calculated at 1,000 kWh, their usage landed in a different pricing tier, and the math fell apart.

This gap between the advertised rate and the rate that actually bills is the single most common source of electricity bill shock in Texas. The fix is not complicated, but it does require understanding three things: how Retail Electric Providers price plans, what the Electricity Facts Label actually tells you, and how to run the math at your usage level before you commit.

Texas operates a fully competitive retail electricity market overseen by the Public Utility Commission of Texas (PUCT). Residents in most of the state choose their own Retail Electric Provider (REP), the company that sells electricity and sets plan prices. The physical wires and poles belong to a separate company called a Transmission and Distribution Utility (TDU), such as Oncor in the Dallas-Fort Worth area, CenterPoint Energy in Houston, AEP Texas in West and South Texas, or TNMP in parts of North Texas.

TDUs charge pass-through delivery fees on every single plan, regardless of which REP you choose. Those fees are not set by your REP, they are set by the TDU and approved by the PUCT. They appear on your bill whether your plan is fixed, variable, or indexed. Because TDU fees vary by territory and because REPs layer on their own energy charges, base charges, and sometimes bill credits, the all-in cost at a given usage level is the only number that matters.

Every plan sold in Texas must come with an Electricity Facts Label (EFL), a standardized disclosure document required by the PUCT. The EFL is the legal authority on what you will pay. The headline number on a shopping page is a marketing summary. The EFL is the contract.

A standard EFL includes:

Average price per kWh at three usage levels. The PUCT requires REPs to disclose the all-in average rate at 500, 1,000, and 2,000 kWh per month. These are called kWh-tier prices. The 1,000 kWh figure is the one most ads use, which is fine if you use exactly 1,000 kWh. If you use 700 or 1,600, a different tier rate applies.

Base or monthly service charge. Most plans carry a flat monthly fee, sometimes called a customer charge or base charge, that you owe regardless of how much power you use. A $9.95 base charge spread over 500 kWh adds nearly 2 cents per kWh to your effective rate. Spread over 2,000 kWh, it adds only half a cent.

TDU delivery charges. These pass through directly to you. They include a fixed monthly charge from the TDU plus a per-kWh usage charge. Both components are itemized in the EFL.

Bill credits. Some plans offer a credit (a set dollar amount knocked off your bill) when your usage falls within a specific window, for example, between 1,000 and 2,000 kWh. These credits can make a plan look dramatically cheaper at exactly 1,000 kWh while being much more expensive at 900 or 1,100 kWh. See the next section for how the math works.

Bill credits are real savings when your usage hits the target window. They can also be the source of significant confusion when it does not.

Here is a simplified example to illustrate the structure (not actual plan data, since plan terms change regularly). Imagine a plan with a flat energy rate of 12 cents per kWh plus a $9.95 base charge plus TDU fees, and a $50 bill credit applied when usage falls between 1,000 and 2,000 kWh.

At exactly 1,000 kWh, that $50 credit brings your effective energy cost down sharply, which is exactly why the plan looks attractive in search results sorted at the 1,000 kWh tier. At 800 kWh, you do not hit the credit window. At 2,100 kWh, you have left it. Your effective rate jumps in both cases.

The PUCT requires bill credits to be factored into the three-tier EFL disclosures, so the 500, 1,000, and 2,000 kWh figures on the EFL already reflect credits where applicable. What they cannot tell you is what happens at 750 kWh or 1,300 kWh. For usage that lands between tiers, you need to calculate manually or use a comparison tool that lets you enter your actual usage.

PowerToChoose.org, the official PUCT shopping site, lets you filter plans and view EFL documents directly. You can also check live plan comparisons for Texas at ElectricRates.org, where rates are updated regularly.

The only way to find your true rate per kWh is to use your own average monthly usage, not the plan's benchmark.

Pull three to six months of bills and find your average monthly kWh. Your TDU delivers this data to any REP you authorize, and most utilities make historical usage available through their online portals. Once you have that number, look up the EFL for any plan you are considering.

From the EFL, identify:

1. The energy charge rate (cents per kWh from the REP)
2. The monthly base or customer charge
3. The TDU delivery charges (fixed monthly portion plus per-kWh portion)
4. Any bill credits and the usage window that triggers them

Add those components at your actual usage level. Divide total monthly cost by your kWh to get your real effective rate. That number, and only that number, is what you should compare across plans.

As of July 2026, the lowest all-in advertised rate on Oncor territory plans at 1,000 kWh was around 7.2 cents per kWh across 132 active plans, with the median sitting near 16.5 cents per kWh. That is a wide spread, and it exists precisely because of the structure described above. A plan near the bottom of that range almost certainly carries conditions, bill credits, or usage thresholds that produce that number only at a specific kWh level. The EFL will show you where the edges are.

No matter how competitive a REP's energy rate is, TDU delivery fees set a cost floor that every Texas electricity customer pays. In Oncor territory, for example, TDU charges include both a fixed monthly component and a variable per-kWh component. CenterPoint, AEP Texas, and TNMP each have their own PUCT-approved fee schedules.

These fees are not negotiable and they do not change based on which REP you choose. What changes is the energy portion of your bill. This is why comparing plans within your TDU territory matters. A plan that looks cheap in Oncor territory might look very different in CenterPoint territory because the TDU fee structures differ.

When you see an all-in EFL rate, it includes TDU fees. When you see a REP advertise an energy-only rate, it does not. Reading the EFL carefully to confirm which charges are included is the critical step most shoppers skip.

Texas plans generally fall into fixed-rate, variable-rate, or indexed categories. The billing math applies to all of them, but the source of rate movement differs.

Fixed-rate plans lock the REP's energy charge for a contract term, typically 6, 12, or 24 months. The TDU delivery fee can still change if the PUCT approves a rate adjustment, but the REP's portion holds steady. This makes the EFL math predictable over the contract term.

Variable-rate plans let the REP adjust the energy charge monthly, usually tied to wholesale power market conditions. The EFL discloses the current rate, not a guaranteed future rate. Variable plans can drop below fixed-rate options during mild weather months and spike sharply during extreme heat or cold events.

Indexed plans tie pricing to a published market index, such as ERCOT real-time or day-ahead prices. These carry the most volatility and require the most careful reading of the EFL methodology section.

For most households trying to understand what rate actually bills, a fixed-rate plan with a clear EFL is the easiest to model. The energy charge is known, the base charge is known, and the TDU fees are disclosed. The only variable is your own consumption.

A few practical steps close the gap between the advertised number and the bill:

Know your average monthly kWh. Check your last 12 months on your utility's portal or ask your current REP for a usage history file.

Read the EFL before, not after, signing. Every plan on PowerToChoose.org links to its EFL. Download it, find the three-tier price table, and locate your usage tier.

Check bill credit windows against your seasonal usage. If you use 800 kWh in spring and 1,800 kWh in summer, make sure the credit window covers enough of your annual usage to matter.

Compare within your TDU territory. Rates vary by territory. An Oncor-territory rate is not the same as a CenterPoint-territory rate, even from the same REP.

Use updated comparison data. Rates shift frequently. Check current Texas electricity plan comparisons at ElectricRates.org for live rates, and cross-reference with PowerToChoose.org for full EFL documents.

The advertised rate and the billed rate can match. They just require a few minutes of EFL math before you sign rather than confusion after the first bill arrives.

Texas gives electricity customers genuine choice and real competition among hundreds of plans. That competition produces a wide range of prices, from roughly 7.2 cents to well above the 16.5-cent median per kWh in Oncor territory as of July 2026. Navigating that range comes down to one skill: reading the Electricity Facts Label at your actual usage level, not the plan's benchmark.

The EFL accounts for the REP's energy charge, the base charge, TDU delivery fees, and any bill credits. It is the legally required disclosure that tells you the true rate per kWh at three usage tiers. Everything else is marketing. Shoppers who build their comparison around the EFL and their own usage data consistently find that the rate on the bill matches what they expected. That is the whole point of the label, and it works when you use it.