Early Termination Fees on Texas Electricity Plans

KEY TAKEAWAYS

An early termination fee (ETF) is a penalty for cancelling a fixed-rate electricity contract early.
Fees come in two major structures: flat fees (the same no matter when you cancel) and per-remaining month (cost decreases as your contract winds down).
ETFs generally range from $150-$400 for flat fees (the longer the plan, the higher the fee), or $15-$20 per remaining month.
You can avoid the ETF entirely if you switch within the last 14 days of your contract.
Paying the ETF can be worth it if your new plan’s savings quickly outpace the cost of the penalty.

What is an early termination fee?

In the Texas deregulated energy market, early termination fees are penalties that electricity customers may incur when cancelling an electricity plan contract before its expiration date.

Electricity providers list the details of a plan’s early termination fee on the Electricity Facts Label (EFL) document.

Early termination fees are standard in the Texas energy market for fixed-rate electricity plans with contracts.

The early termination fee can protect the energy provider by helping to recoup any costs associated with bringing on a new customer.

For example, when a new customer signs a contract, an energy provider will typically purchase electricity ahead of time to hedge for that customer’s expected usage.

example electricity plan early termination fee

How do early termination fees work?

Early termination fees are applied on fixed-rate electricity plan contracts when a customer decides to cancel the plan before the agreed upon expiration date.

Fixed-rate vs variable rate plan ETFs

Fixed-rate electricity plans have early termination fees because they have a contract with a specified end date. The provider expects the customer to stick around for the full duration of that contract, and uses the early termination fee to recoup potential losses if a customer decides to cancel ahead of time.
Variable-rate electricity plans do not have early termination fees because they do not have contracts. Instead, variable-rate plans are month-to-month and a customer may cancel at any time without incurring a penalty.

Flat fee vs per-remaining-month ETF structures

There are two major types of early termination fees: flat fees and per-remaining-month fees.

With a flat fee ETF, the cost of the fee is the same no matter when a customer decides to cancel – excluding the final 14 days of the contract. For example, the ETF fee remains the same if there are 8 months, 6 months, or 4 months left in a contract.
With a per-remaining-month ETF, the cost to cancel declines as the contract progresses. For example, if the ETF is $20 per remaining month and there are 3 months left in the contract, the penalty would be $60.

How much do early termination fees cost?

Typical early termination fee costs range from $15 to $20 per remaining month, all the way up to $300.

You can find the cost of an early termination fee on the plan’s Electricity Facts Label (EFL) document.

Cost of early termination fees by term length

Early termination fees will vary by provider and term length, but the general rule is the longer the contract, the higher the early termination fee.

Term Length	ETF Cost Range
3 months	$50-$150
6 months	$100-$250
12 months	$150-$300
24 months	$300-$500
36 months	$300-$500

When are you exempt from paying an ETF?

There are a few scenarios where you are not required to pay an early termination fee:

When you’re moving to a new home in an area where your provider is not able to provide service: The provider will waive the ETF if you provide proof of your move, such as a lease or mortgage document.
When you sign up with a provider that has a satisfaction guarantee or risk-free trial: For example, a provider may not require an ETF if you decide to cancel within the first 30 days of the contract.
When you sign up for a variable-rate plan: Variable-rate plans are month-to-month without contracts and do not require early termination fees.

How to avoid or minimize ETF payments

You may also avoid or minimize an early termination fee in the following situations:

If you cancel your fixed-rate plan in the last 14 days of the contract, you are not required to pay an early termination fee per Public Utility Commission of Texas (PUCT) rules.
By signing up for a contract with a per-remaining-fee ETF, you can minimize the penalty by switching providers later in the plan. With fewer months remaining on the plan, the ETF is reduced.
Avoid an early termination fee all together by renewing with your current electricity provider.

Is paying the early termination fee worth it?

Wondering if paying the early termination fee is worth it? In some cases, switching providers and incurring an ETF can be financially beneficial in the long-term.

For example, if you find a new contract with a significantly more affordable energy charge, the savings with your new plan may quickly eclipse the cost of the early termination fee.

BKV Energy created a custom “Should You Switch Electricity Providers?” calculator that utilizes the average price of your current plan, the average price of your new plan, your average monthly kilowatt-hour (kWh) usage, and the early termination fee to determine how long it may take make the switch worth the money.

Why choose BKV Energy?

Looking for a new electricity provider in Texas?

BKV Energy is proud to provide Texans with simple, transparent, and affordable fixed-rate electricity plans with no hidden fees and no gimmicks.

That means no base charges, no minimum usage fees, no setup/bundle fees, and no gimmicky bill credits or time-of-use terms.

Our fixed-rate electricity plans feature per-remaining-month early termination fees. We believe the per-remaining-month ETF structure is more fair to the customer as it makes it easier to switch to a different provider the longer you’ve stayed with us.

Have questions about our plans? Contact us at [email protected] or 855-258-4797.

Frequently asked questions about early termination fees

How much do early termination fees cost?

Most early termination fees range from $150 to $400 depending on the length of the plan. Many providers offer plans with per-remaining-month structures that range from $15-$20 per remaining month.

Where can you find your plan’s early termination fee?

You can find the early termination fee listed on the Electricity Facts Label or by contacting your provider directly for more information.

Can I avoid paying the early termination fee?

Yes, you can avoid paying an early termination fee by switching in the last 14 days of the contract, by signing up for a variable-rate plan without an ETF, or when moving to an area where your provider cannot offer service with proof of the move.

What plans have early termination fees?

Fixed-rate plans have early termination fees. Variable-rate, month-to-month plans do not have early termination fees.

Written by Graham Lumley

Graham Lumley, Growth Product Manager at BKV Energy, leads digital and traditional marketing strategies, focusing on educating Texans about the state's deregulated energy market. With over 10 years of marketing experience, he creates content to help consumers understand and save on their energy bills, bringing a fresh and dynamic approach to the industry.