7 Things to Consider When Choosing an Electricity Plan
5 minute read • Graham Lumley • Last update June 2024
Tired of feeling like you’re stuck with an energy plan that doesn’t fit your needs? We hear you!
In this guide, we’ll show you how to choose the best energy plan in Texas. Here’s what we’ll cover:
There are a few different types of electricity rates in the Texas market, but there’s only one you should pay any attention to—fixed rate plans.
Fixed rate plans are the best option because you’re locked into the same energy charge for the duration of your contract, even when market rates increase. That means you’re protected from the increased costs of electricity during summer months when demand on the grid is much higher.
When you’re shopping for electricity, we recommend to always look for a fixed rate plan.
| Rate | Explanation |
|---|---|
| Fixed | The price per kilowatt-hour remains constant for the duration of your contract. They are not impacted by fluctuations in market prices. |
| Variable | The price per kilowatt-hour can change every month during your contract. When market prices increase, the rate increases and vice versa. These rates are set at the discretion of the provider. |
| Indexed | Similar to a variable rate, the price per kilowatt-hour can change every month during your contract. The difference is that the rate is tied to a publicly available index, rather than the discretion of the provider. These plans have been banned in Texas since 2021. |
Texas electricity providers offer a wide range of contract lengths, ranging from 1 month to 3 years. Sometimes you may even find a 4 or 5 year plan.
How do you know which one is right for you? Well, each term length has its pros and cons, and some are more appropriate for one shopper over another. Let’s dive into the details of commonly offered plan terms.
| Term Length | Explanation |
|---|---|
| 1 month | Variable plans offer short-term flexibility and are appropriate for folks who are planning to move in the near future. |
| 3 months | Similar to a 1 month plan, 3 month plans also offer short-term flexibility for those who may not live in the same place for much longer. They are also a great solution to reset your renewal cycle to the spring or fall when rates are lower. |
| 6-9 months | 6-9 month plans offer a similar benefit to 3 month plans. If you are currently stuck in a cycle of renewing your plan during the summer or winter, you can use a 6-9 month plan to take advantage of lower spring or fall prices in the future. |
| 12 months | 12 month plans are great for renters on 12 month leases or homeowners who don’t want to be locked into a longer term contract. |
| 24-36 months | 24-36 month plans often have lower rates than 12 month plans. They are great for homeowners or long term renters who don’t want to worry about renewing their contracts on a yearly basis. |
| 48 months or longer | Plans these long are pretty rare, but can be beneficial to homeowners who want to take advantage of a long term fixed rate. |
There’s no catchall right answer for which term length is best because everyone’s circumstances are different. Weigh the pros and cons of each offering and select the option that best fits your needs and lifestyle.
Most electricity provider and plan comparison websites list the average price of an electricity plan at a usage of 2000 kWh. However, that’s not the true cost of electricity for those plans.
How can you tell what you’ll really be paying? This takes us back to BKV Energy’s age-old mantra—always, always, always check the Electricity Facts Label.
When you look at the Electricity Facts Label, you’ll see a table that shows the average price of electricity at 500, 1000, and 2000 kWh. Below that, you’ll also see a price next to the text “Energy Charge” and that’s what you should pay attention to when shopping.
When comparing plans, don’t compare the average price. Instead, look for the lowest energy charge you can.
Two things to look out for when you’re referring to a potential plan’s Electricity Facts Label? Base charges and usage fees.
Many providers tack these charges onto a plan, hoping that you won’t notice when you pay up to nearly $120 more per year. These charges range from $4.95 to $9.95 (sometimes higher!) per month. You will want to avoid providers and plans that include these unnecessary fees on their customers’ bills.
| Charge | Definition |
|---|---|
| Base charge | A fixed fee that is billed to customers regardless of their electricity usage. Typically intended to cover the costs of administrative expenses incurred by the energy provider, but many providers are able to offer plans with lower rates without including a base charge, so look elsewhere. |
| Usage fee | A fee that is billed to customers when they use “too much” or “too little” electricity during a billing cycle. For example, one major Texas provider includes a $9.95 usage fee on bills when you consume less than 800 kWh. We do not recommend signing up for a plan that includes this extra cost. |
Early cancellation fees or early termination fees are applied when you leave a contract before its completion date. There are generally two types of early cancellation fees.
Our recommendation? Choose a plan that has an early termination fee that decreases the longer you’re a customer. That way if you decide to leave for any reason, it’s easier to switch providers or plans.
In Texas, many providers advertise benefits such as “free nights” or “free weekends” or $150 bill credits.
These are marketing ploys to grab your attention and lure you into expensive electricity contracts. We’ll remind you once again—always, always, always check the Electricity Facts Label.
Even with a bill credit or “free” electricity over night or on the weekends, these plans are often more costly than a simple fixed rate plan.
Why? They elevate the energy charge!
For example, a typical free nights plan will have an energy charge twice as high as a simple fixed rate plan. That means that even with free electricity at night, you’ll end up paying higher bills because most of your electricity consumption happens during the day.
There are a few more factors to pay attention to when comparing electricity providers in Texas:
At BKV Energy, we work hard to offer electricity plans that meet all of the above criteria to help Texans save big on their monthly energy bills. If you’re interested in switching to a provider with affordable fixed rates, no unnecessary fees, great customer service, a robust rewards program, and much, much more, then enter your zip code below.
