What Is Month-to-Month Electricity? An Overview

With so much uncertainty in the world right now you are looking for anything that will make your life a little easier.

As you search for ways to make your life less complicated, you may have overlooked your electricity plan.

A month-to-month electricity plan may offer you the flexibility and ease you are looking for right now.

And better yet, you might even find a cheap month-to-month electricity plan that can save you money.

This guide will walk you through everything you need to know about month-to-month electricity plans and help you determine if this type of plan could be right for you.

On this page:

  1. Why You Have A Choice In Electricity
  2. What Does Month-To-Month Electricity Mean?
  3. Electricity Rates For Month-To-Month Energy Plans: Texas
  4. Types of Month-to-Month Electricity Plans
  5. How To Know If A Month-To-Month Electricity Plan Is Right For You
  6. How To Find The Right Month-To-Month Electricity Plan For You

Why You Have A Choice In Electricity

Due to the deregulation of electricity in Texas, you can choose from hundreds of Retail Electric Providers (REP) that service Texas residents.

What is deregulation and how does it affect your electric bill?

Texas is one of 18 states that have deregulated electricity. In 2002, the Texas Senate passed Bill 7, which called for the deregulation of electricity throughout the state.

The Senate bill allows most electric customers in Texas to choose their electricity provider.

An open energy market forces electric companies to compete for your business which means you can benefit from competitive rates, plans, and options.

One of the options you can choose from is month-to-month electricity.

What Does Month-To-Month Electricity Mean?

Month-to-month electricity plans are similar to a month-to-month lease option for your home or apartment.

Instead of being locked into a long contract, you can choose each month whether you want to continue with the electricity plan or change it.

Keep reading to learn about :

  • The benefits of choosing a month-to-month electricity plan
  • How the rates for these plans are determined
  • How to decide if a month-to-month electricity plan is a good option for you.

At this point you might be tempted to just Google “month-to-month electricity plans” but this may actually result in you overpaying for electricity.

Wait, what?

The only way to ensure you are not overpaying for electricity is to compare every single REP in your zip code to find the best electricity plan for your unique needs.

Energy usage is like a thumbprint — everyone's is unique. Since energy usage is highly individualized, you will need to examine your own situation.

It is extremely difficult to know which electricity plan is truly right for your unique electricity needs.

Even if you think a plan is the best for you, how can you be 100% sure?

Our partner, Power Wizard, has a proprietary algorithm that allows you to find the best electricity plan for your needs. Click here to find the best plan for you.

Below we discuss all the factors to consider when searching for the best electricity plan for your unique needs.

Electricity Rates For Month-To-Month Energy Plans: Texas

Month-to-month energy plans are generally based on a variable rate. We will explain the difference between variable rates and fixed rates plans in the next section.

Simply searching for electricity rates will not give you the full picture of the cost and savings of a month-to-month energy plan.

A low rate doesn’t always equal a low electricity bill. You may choose a plan with the lowest rate but fail to realize the additional charges and fees tacked onto your monthly energy bill.

Some of these additional fees include:

  • Energy Efficiency Recovery Factor
  • Distribution Cost Recovery
  • Rate Case Expense Surcharge
  • Supplemental Franchise Fee

When extra fees and charges are added to the lowest rate, your “cheap electricity plan” may end up being more expensive.

The cost of electricity is based on national and regional electricity rates.

The current U.S residential rate is 13.55¢ per kWh, however, the average rate for Texas is 12.01¢ per kWh.

Wholesale electricity prices change dramatically based on:

  • Location
  • Supply and demand
  • Weather
  • Market trends
  • Usage patterns

With so many variables it can be difficult to accurately determine your monthly electricity bills when they are based on wholesale energy rates.

When demand for electricity is low, like in the winter months, wholesale electricity may be cheaper than fixed-rates. But as demand increases, like in the summer, wholesale rates can double or triple compared to the cost of fixed-rates — leaving you with a huge bill.

Next, we will discuss the difference between fixed-rate electricity plans and variable-rate plans.

Fixed-Rate Electricity Rates

When Retail Electric Providers (REP) purchase energy in bulk at an average market price they often pass this rate onto their customers. This is called a fixed-rate electricity plan.

Fixed-rate plans lock in a kWh rate for a predetermined period of time no matter the season or amount of energy used. The rate per kWh used remains the same.

The benefit of these plans is that there are no rate hikes, however, they do generally require contracts so they do not offer much flexibility if you want to change plans or terminate your service early.

Variable-Rate Electricity Rates

A month-to-month plan with a variable electricity rate often has no contract and no termination fees.

Plans that allow for no contract means no commitment, so you can terminate your plan anytime without hefty termination fees.

The downside to variable-rate plans is that the rate per kWh is often higher because it is based on the current market value of electricity, the wholesale rate.

Electricity rates can change every 15 minutes based on demand, supply, and weather.

A variable-rate plan can possibly save you money if the rates are low. But these plans will often cost far more when electricity rates sky-rocket.

Types of Month-to-Month Electricity Plans

Most retail electric providers offer two types of month-to-month electricity plans:

  1. Prepaid plans
  2. No deposit plans

Keep reading to learn more about these types of plans.

Month-to-Month Electricity: Prepaid

Prepaid plans are pretty self-explanatory; you pay for electricity before you use it. A prepaid plan allows you to determine how much money you want to spend so you can avoid surprise bills.

The benefits of prepaid month-to-month electricity are:

  • No credit check
  • No deposit
  • No reconnection fees
  • No termination fees

The downside to prepaid electricity plans are:

  • Minimum account balance required
  • Variable rates (fluctuating rates)

Month-to-Month Electricity: No Deposit, No Prepaid

We mentioned above that most prepaid electricity plans do not require deposits, but are there any month-to-month electricity plans that are not prepaid that do not require a deposit?

Many REPs offer electricity plans with no deposit for customers with good credit, but not everyone has stellar credit.

So, are there any month-to-month electricity no deposit no credit check options?

A month-to-month electricity plan gives customers the option to prepay for electricity with no deposit and no credit check.

How To Know If A Month-To-Month Electricity Plan Is Right For You

You may be wondering if a month-to-month electricity plan is right for you. To figure that out let’s take a look at Bobby and Courtney.

Bobby and Courtney recently graduated from college and got married. They are both still very young and haven’t had a chance to establish a strong credit history. They found a cute apartment near both of their jobs and are excited to start their life together.

As the newlyweds begin to move into their new home they discover most electricity companies require a deposit, in some cases up to a $500 deposit. They simply don’t have the money to pay a deposit, so what can they do? They have to have electricity — it’s a necessity.

Instead of living in the dark, Bobby and Courtney can opt for month-to-month electricity with no deposit and no credit check.

If you can’t afford to pay a deposit or don’t have great credit, a month-to-month electricity plan might be a good option for you too.

In the following section, we will talk more about the benefits of month-to-month electricity.

3 Benefits Of Month-To-Month Electricity

Still not sure if a month-to-month electricity plan is right for you? We will detail the benefits of these types of plans to help you find the best plan for your needs.

No Credit Check Month-To-Month Electricity

Whether you racked up student loans, maxed out a few credit cards, or are in the process of trying to recover from a messy divorce, your credit might not be great.

No credit check, month-to-month electricity plans don’t punish you for a low credit score. You can still get electricity without having to relive your financial disgraces.

These plans are based on a variable rate (discussed above), usually don’t require a deposit, and allow you to pay for electricity as you go.

No Deposit

Deposits are like a safety net for landlords, car dealerships, and REPs. They ensure that if customers don’t pay their bills, the seller can recoup part of their losses.

Most of the time deposits are required for electricity service in cases where the customer does not have established or good credit. On the contrary, many REPs don’t ask for a deposit if your credit score is above 600.

If you don’t qualify for a no-deposit electricity plan, there is another option: a month-to-month electricity, no deposit, no credit check plan. These plans are prepaid and based on variable rates.

No Contract

You need your freedom. You don’t want to be tied down, locked in, trapped.

This is why a month-to-month no contract electricity plan might be a good choice for you.

Month-to-month electricity plans give you the flexibility to embrace your wanderlust.

Most electricity plans require you to sign a 6, 12, or 36-month contract, locking you in. In order to get out of these contracts, you will have to pay hefty termination fees.

If you don’t want to feel stuck in a contract, a no-contract, prepaid month-to-month electricity plan may be a good choice for you.

How To Find The Right Month-To-Month Electricity Plan For You

You are reading this article because you want to find the best month-to-month electricity plan for your needs, but how do you do that?

You have two options:

Option 1: spend an enormous amount of time searching the internet.

Hope your computer chair is comfortable because this option means you will be sitting there for a long time as you search through hundreds of Retail Electric Providers and thousands of individual electricity plans.

In order to properly compare electricity plans you need:

  • Spreadsheet software
  • Extensive knowledge of energy plans and REPs
  • Endless hours of your precious time

Searching and comparing electricity companies in Texas on your own is a tiresome task that offers no guarantee that you will find the best month to month electricity plan for your needs.

But there is another option.

Option 2: spend 2 minutes to find you the best electricity plan for you.

Our partner, Power Wizard, has a proprietary algorithm that helps you to find the best electricity plan for your needs.

Energy usage is like a thumbprint, it is unique to each individual. Power Wizard uses your smart meter data to create your energy usage profile.

Their technology uses your electricity usage profile to scan hundreds of electricity rates and plans to match you with the best one.

Are you ready to find the best electricity plan for you? Click here to get started today.

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