Electricity Companies By Zip Code: A Guide To Comparing Texas Electricity Rates
The Lone Star State currently has more than 160 retail electric providers (REPs). Each REP offers multiple electricity plans.
So, where do you begin? How do you choose?
Finding the right electricity plan for you can be a very complicated process. Or–it can be as simple as five numbers.
To find the best rate and plan for you, all you need is your zip code.
This guide will explain:
- How electricity rates are determined in Texas
- Factors to consider when comparing electricity rates
- How to use your zip code to find the best electricity plan for you
On this page:
- Electricity Company By Zip Code: Why Are There So Many?
- Electricity Company By Zip Code: 4 Ways Electricity Rates Are Determined in Texas
- Electricity Company By Zip Code: 6 Factors To Keep In Mind When Comparing Electricity Rates in Texas
- Electricity Company By Zip Code: Finding The Best Electricity Rate In My Zip Code
Electricity Company By Zip Code: Why Are There So Many?
Why are there so many companies offering electricity plans in Texas?
In large part, it’s due to the fact the energy market is deregulated in the majority of Texas cities and counties.
This means the government has allowed individual companies to sell electricity directly to consumers. So as the consumer, you get to choose who to buy electricity from.
Consumer choice means competition, which is why so many REPs compete to sell you electricity.
What is Deregulation?
If you’re new to Texas, deregulation may not be something you’re familiar with.
Good news–it’s not as complicated as it sounds.
In 1999, the Texas State Legislature voted to deregulate the electricity industry. This opened up the electricity market in 2002, allowing competition for consumer business. Nearly 70% of cities and counties in Texas have deregulated electricity.
That means consumers in these areas can pick the electricity provider and plan they want.
Before deregulation, one company had a monopoly on the electricity market. After deregulation, dozens of providers entered the market.
How does this benefit you?
Competition often drives prices down.
In addition to lower rates, other benefits of deregulated electricity include:
- More energy options
- Ability to switch plans without service interruption
- Access to green energy options
If you’re interested in any of those benefits and more, our partner, Power Wizard, has developed a proprietary algorithm that allows you to find the best electricity plan for your needs. It takes just two minutes to complete, and Power Wizard takes care of the rest. Click here to find the best plan for you.
Electricity Company By Zip Code: 4 Ways Electricity Rates Are Determined in Texas
You may wonder how electricity companies come up with the rates they charge for electricity.
The rate per kWh isn’t random–these rates are calculated based on four factors, including:
1. Purchasing Processes
2. Supply and Demand
4. Transmission and Distribution
#1 Purchasing Processes
*Electricity rates are constantly changing. If you find a great rate, you’ll want to act fast. That’s because electric rates in your zip code could potentially change every 15 minutes.*
Energy companies monitor prices constantly. They base their rates in your zip code on those costs measured in cents per kWh.
Your REP takes all of this into account when determining your rates over a specified contract period.
Electric rates in your zip code are ultimately determined based on:
- How much electricity your REP thinks you will use
- The time of year; and
- The cost of transmitting that electricity to your home
Their goal is to provide competitive rates to customers like you, while still earning a profit for themselves.
#2 Supply and Demand
Supply and demand. You’ve heard the terms. But how do they help determine the cost of electricity?
High demand and low supply cause prices to rise while low demand and high supply cause prices to fall.
When people are using electricity faster than grid operators can replenish the supply, costs tend to rise.
Energy companies have to seek fuel from less efficient or more expensive sources to meet the demand and maintain their supply.
When electricity is not in high demand, supply stores may be abundant, and to make room for continued production, energy companies may lower rates.
The added cost or savings is often reflected in the price of electricity for you.
Seasonality means that electric companies know there are peak times for usage depending on the season.
In Texas, usage will likely spike during summer when customers run air conditioning nonstop to keep the heat in check.
Energy companies must account for those periods of high electric usage. This will be reflected in the calculation of rates for your zip code.
#4 Transmission and Distribution
Just like a package from Amazon, your electricity is delivered to you. That’s why proximity to pipelines is also a factor in your electricity rate. This is determined based on your zip code.
The closer you are to the supply, the cheaper electricity is likely to be.
*While transmission and distribution are the responsibility of local utility companies, not REPs, you will be charged for this service.* The fee is typically tacked on to your monthly bill.
Electricity Company By Zip Code: 6 Factors To Keep In Mind When Comparing Electricity Rates in Texas
When using your zip code to decide on an electricity company and rate, there are a few important factors to keep in mind. These include:
- Plan types
- Plan availability
- Contract terms
- Hidden fees
- The cheapest rate doesn’t mean the best plan
- Individual usage
#1 Plan Types**
Much like cell phone companies offer several plans (free nights and weekends, unlimited data, etc.), electricity companies provide various types of plans.
Knowing the differences between these plans can help you make the best possible choice for you. Here are the most common types of electricity plans that may be available in your zip code:
Fixed Rate Plan
A fixed-rate plan offers a locked-in rate for a designated length of time. Plan lengths may vary.
The price per kWh stays the same throughout the term of your contract, even when the market price shifts.
- This type of plan generally involves a contract. You choose the length of that contract, but plans typically range from three to 36 months. While under contract, you’ll incur a fee if you cancel your plan.
- You’ll have a good idea of how much your electricity bill will be each month. Knowing the rate you are paying per kWh for the entirety of your agreement provides consistency and helps with budgeting. Assuming your usage remains steady from month-to-month, you’ll have the ability to anticipate your monthly bill.
- Fixed-rate plans can be a gamble. Fixed-rate plans can save you money when prices are rising. However, you may also end up paying more if energy prices fall.
Variable Rate Plan
Also called a “month-to-month plan,” a variable rate electricity plan allows customers to pay for electricity month-by-month without locking themselves into a contract with a set electricity provider.
This type of plan is popular with consumers looking for:
- Flexibility. These plans don’t include a contract, so if you find a better deal, you can switch plans and providers without penalty.
- Short term options. This type of plan is appealing if you plan to travel frequently in the coming months, your lease is ending and you’re unsure about renewing, or your house is on the market and you anticipate moving soon.
- A turn in the market. If electricity rates are high and you’re expecting them to drop, you may want to avoid locking in a high rate with a fixed-rate contract.
- No required deposit. Oftentimes, month-to-month plans require no upfront deposit to get the lights turned on.
With prepaid plans (also called “pay as you go”), customers purchase a certain amount of electricity in advance.
Most electricity companies have a set minimum that can be added to an account in advance each month.
Then, as a customer uses electricity, money is deducted from their account at a set rate.
Customers can track their usage daily and receive updated account balances. This allows them to either add more money to their account (if they are using more electricity than planned for) or make necessary changes to cut back usage, stretching their dollars further each month.
- No credit check or deposit necessary
- No unexpected, sky-high bills
- Allows more control over spending
- An incentive to conserve energy
- Typically a higher per kWh rate
- When a prepaid electricity account runs out of credit, service is turned off
- Oftentimes, higher reconnection fees
Free Nights And Weekends
When you hear free nights and weekends, you may be transported back to the late 1990s/early 2000s, when you’d wait until 9 p.m. to make calls on your cell phone.
Free nights and weekends aren’t just for cell phone providers anymore. It’s a perk electricity companies have started offering.
Before you rush out to purchase this type of electricity plan, you’ll want to read the fine print in the “Terms of Service” contract.
Understand what “free” really means before making a commitment:
Here are a few questions you should ask when considering a free nights and weekends electricity plan:
- What time does your free energy begin? Is it from 7:00 pm, 9:00 pm, or midnight?
- Are you in bed by 9:30 pm? If so, you aren’t using much energy at night.
- When does the weekend begin? Friday at 5:00 pm or Saturday morning?
- Are you home all weekend or chauffeuring kids and running errands?
If you use less energy during the “free hours,” this perk may not save you much since the bulk of your energy usage will be during peak hours, meaning a higher kWh rate.
Plans that offer free nights and weekends use variable rates, so while you may be saving on nights and weekends, you may be paying more during weekdays.
#2 Plan Availability
It’s important to keep in mind, not all plan types may be available in your area.
To find out exactly what electricity plans and rates you have to choose from where you live, you’ll want to head here, enter your zip code, and answer a few quick and easy questions.
#3 Contract Terms
It’s essential to understand your contract terms. After all, it may be in your best interest to change plans annually, depending on your usage rates.
Maybe you were in such a hurry to get electricity set up you ended up with a plan that doesn’t make sense for you or your family.
Despite selecting what you thought was a low rate, you’re being hit with charges and fees you didn’t realize would appear on your bill month after month.
It sounds like it’s time to switch electricity plans.
It’s been on your to-do list for months. The problem is, you’re worried about cancellation fees, and you aren’t sure you’re up for the hassle of researching a new plan.
Time to stop procrastinating.
- Step 1 - Read your contract. This should only take 5-10 minutes. Find out the financial penalty for switching plans or providers. A one-time penalty fee may be worth paying if you’ll SAVE money each month after.
- Step 2 - Start shopping for another plan and rate.
Don’t want to have to repeat the research process every year? Our partner, Power Wizard, can help make sure you get the best rates by monitoring your electricity usage and automatically switching you over to a different company if a better rate is available. Cancellation fees are taken into account.
#4 Hidden Fees
When it comes to your electricity bill, the last thing you want is to be unpleasantly surprised by hidden fees. Beware of:
- Introductory rates. Look out for plans with attractive “teaser rates” that rise steeply after the introductory period.
- Delivery charges. You might see a TDU (Transmission and Distribution Utility) delivery charge on your bill each month. This fee is for maintaining and servicing power lines that deliver electricity to your home as well as for residential electricity meters. These charges can occur each month.
- Overage charges. Some companies hit you with extra fees if you exceed energy limits.
- Minimum usage requirements. On the flip side, if a household falls below a certain usage (often 1000 kWh) in a month, some providers charge a penalty fee.
- Late fees. Just as it sounds, fail to pay your electricity bill on time, and you’ll likely be slapped with late fees.
Bottom line: when selecting an electricity company and plan, make sure to read the fine print. It’s important to know exactly what you’re paying for.
#5 The Cheapest Rate Does Not Mean The Best Plan
When searching for electricity rates by zip code, you may stumble on a rate you think is too low to pass up.
Warning: be wary.
The rate might be inexpensive, but your overall monthly bill may not.
Much like budget airlines which charge fees for everything from picking out your seat to bringing a carryon if you don’t register it in advance, with a budget electricity rate, there’s a good chance you’ll be nickel and dimed with fees along the way.
Some of the common ways to do this are:
- Minimum usage requirements
- Customer service fees
- Renewal charges
- Market price fluctuations
Make sure to look closely at your electricity bill each month. If you’re getting hit with unexpected charges or your bill is higher than you expected, it may be time to go back to the drawing board and find a new rate and plan.
#6 Individual Usage
When selecting an electricity plan by zip code, it’s important to think about your individual usage needs and situation.
Factors to consider might include:
- Home and family size
- Age of home
Electricity Company By Zip Code: Finding The Best Electricity Rate In My Zip Code
Using your zip code is your best bet for finding the electricity company and rate for you.
Depending on where you live in Texas, you may have dozens, if not hundreds of electricity rates and plans available to you.
How do you decide?
You’ve got two options:
- The tedious, frustrating, time-consuming way; or
- The easy way
Option #1: Try To Find The Best Rate Manually
As you’ve learned, the lowest rate may not be the best rate for you.
So you commit to researching plans to compare not only the rates but the additional fees, contract lengths, and other terms, visiting website after website to do so.
Even if you’ve got great research skills, looking into the ins and outs of dozens of electricity providers, rates, plans, overage charges, cancellations fees, and more could take hours (if not days).
If you’re still not deterred, you’d better invest in some good blue light blocking glasses while you’re at it!
Option #2 Use Our Partner’s Free Savings Estimate Tool
If staring at a computer screen searching for an electricity company by zip code for hours doesn’t sound like your idea of a fun weekend, no problem.
Luckily, there is another option.
Let our partners at Power Wizard take care of the hard part for you. Using their Free Savings Estimator, Power Wizard will match you with a new plan and provider in a matter of minutes.
The process is simple:
- Head to Power Wizard’s Free Savings Estimate tool
- Enter your zip code
- Answer a few short questions about your home and electricity usage
- Wait less than five minutes
- Review the plan that Power Wizard found specifically for your and your needs
From there, Power Wizard takes care of everything, including the sign-up process.
BONUS: Long after you’ve checked “find an electricity plan” off of your to-do list, Power Wizard continues to monitor your plan month after month to ensure it remains the best possible option for you and your family.