Fixed vs variable electricity rates in Texas
By the kWhCompare Editorial Team · Updated September 26, 2026 · 3 min read
For most Texas households a fixed-rate plan is the safer choice. Variable rates can be useful for short stays or bridging between contracts, but they come with price risk you don't control.
How a fixed-rate plan works
A fixed-rate plan locks the energy charge for the length of the contract, usually 6, 12, 24 or 36 months. Your bill still moves with how much you use, and pass-through charges such as TDU delivery fees can change when regulators update them, but the provider can't raise its own price.
Pros: predictable costs, protection from summer and winter price spikes, easy comparison between plans.
Cons: an early termination fee (often $150 or $10–20 per remaining month) if you leave early, and no benefit if market prices fall.
How a variable-rate plan works
A variable-rate plan has no fixed term. The provider can change the price from one billing cycle to the next, usually based on wholesale costs and its own pricing decisions. In Texas, these are typically month-to-month plans with no cancellation fee.
Pros: no contract and no termination fee, so you can leave any time.
Cons: prices can rise sharply in heat waves and freezes, and many "default" variable rates are well above the best fixed offers.
After Winter Storm Uri in February 2021, when some customers on wholesale-indexed plans received bills in the thousands, Texas banned wholesale-indexed plans for residential customers. Today's variable plans can still rise, but you won't be exposed to raw real-time wholesale prices.
Side by side
| Fixed rate | Variable rate | |
|---|---|---|
| Price changes | Locked for the contract | Can change monthly |
| Contract | 6–36 months | Month to month |
| Cancellation fee | Usually yes | Usually no |
| Summer and freeze risk | Protected | Exposed |
| Best for | Homeowners, long-term renters | Short stays, bridging gaps |
What about indexed and time-of-use plans?
Indexed plans tie your rate to a published benchmark, often natural gas prices, so they move more predictably than a pure variable rate but can still rise. Time-of-use plans, including "free nights" and "free weekends," charge different prices at different times. They're usually fixed during the term, but the daytime rate is higher to pay for the free hours, so they only save money if you really shift a large share of your usage.
When a variable rate makes sense
Choose a variable plan if you're moving within a few months, waiting for a better fixed offer, or bridging the gap after a contract ends. Set a reminder to switch to a fixed plan as soon as you can, and check the price every month.
How to compare fixed plans properly
The advertised price is the average at 1,000 kWh and already includes TDU delivery. At different usage the real price can be very different, especially with bill credits or base fees. Take the energy charge and fees from the plan's Electricity Facts Label and run them through the calculator on your city page.
For example, in Oncor territory a simple fixed plan at 10.5¢ energy with no fees costs about $169.36 at 1,000 kWh (16.9¢ all-in). That's a useful benchmark: most plans advertised well below it rely on a bill credit you may not always earn.
Enter any plan's energy charge and fees for your city.
Frequently asked questions
Is a fixed or variable electricity rate better in Texas?
For most households a fixed rate is better because it protects you from summer and winter price spikes. Variable rates suit short stays or bridging between contracts.
Can a fixed-rate plan price change?
The provider's energy charge is locked, but pass-through charges such as TDU delivery fees and taxes can change when regulators update them.
What happens when my fixed-rate contract ends?
Most providers move you to a month-to-month variable rate, which is often higher. You can switch without a cancellation fee within 14 days of your contract's end.