Texas Power Guide: A Handbook for New Residents
Shopping for electricity in Texas and want a trustworthy source to guide your energy decisions, as a new resident of the Lone Star State? You’ve come to the right place – our guide to Texas power options, rates, and how to make the most of your dollars.
Texas electricity market overview
In most of Texas, energy is deregulated, which means that you are assigned a utility company based on where you live, and then are free to choose which electricity provider brings energy to your home. The energy itself comes from the utility (Transmission and Distribution Utility, or TDU), which also maintains power lines and infrastructure. There is also a nonprofit governing body called ERCOT, or the Electricity Reliability Council of Texas which manages the flow of electricity through most of the state’s power grid, and is the central point for our electricity market.
To get electricity to your home or business, you have to choose a Retail Electricity Provider (REP), which buys power on the wholesale market and sells it to you. This helps keep energy prices low, because it is a competitive market. The plan options that REPs offer, their customer service, renewable energy options, advanced technologies, and user experience can help you choose which REP is the right fit for you.
Electricity Rates Explained – Factors Influencing Electricity Prices in Texas
Reliance on Natural Gas Around 40% of electricity in Texas is produced from power plants fired by natural gas and coal, so the wholesale cost of power is closely linked to that of natural gas. Natural gas prices started rising in 2020, and as manufacturing processes ramped back up after the COVID-19 pandemic, prices rose even higher. Another factor that can impact the cost of energy is geopolitical unrest; for example, Russia’s war against Ukraine prompted European nations to source natural gas from places other than Russia, causing prices to go up.
Impact of Weather Extremes on Infrastructure
According to ERCOT, the coal and natural gas plants that generate power are operating on an aging infrastructure, which makes them susceptible to bad weather. Hot summers strain natural gas plants, as the turbines used to produce their electricity become less efficient during high temperature days and so more gas is required to generate the same amount of electricity. But cold temperatures can also have an impact. When natural gas pipelines freeze, it causes major disruptions, also causing prices to go up. After the major winter ice storm of 2021, which caused widespread outages that lasted for days, ERCOT was instructed to make improvements and updates to the grid.
Renewable Energy Options in Texas
According to an article in Texas Monthly written in September 2023, Texas generates more electricity from the wind and sun than any other state, and has done so since 2006. In fact, in 2021 Texas’ output of renewable energy was more than double than that of California, which came in second place.
This is in part because our state has huge expanses of land to build on. But it was politics that pushed Texas to the top of the heap; in 1996, then-governor George W. Bush famously said “We like wind,” beginning the state’s surprise emergence as a leader in renewables. A few years later, Texas did away with electric utility monopolies, which opened the door for developers of renewable energy to invest in our state’s renewable resources.
How Technology is Changing Texas Electricity Usage
The technology advances that are available today for smart, green, and efficient energy distribution are incredible. The more data-obsessed your Retail Electricity Provider is, the more it can help put you in control of your electricity use and spending.
At Rhythm Energy, we use Smart Meters to monitor every home and business’ energy usage and send data in real time to the appropriate utility company. No more waiting for a meter checker to drop by and read your meter, it all happens wirelessly and instantly every 30 minutes, so your energy usage readings are always up to date and accurate. Smart Meters are also an important component of the Smart Grid, which uses digital technologies, sensors, and software to match the demand and supply of energy (also in real time) while also helping make sure that the grid remains reliable and stable.
We also keep you informed with Smart Alerts, which break down your weekly energy usage and project your costs based on a proprietary algorithm. You even get a bill predictor along with it. Meaning that you’ll never again be surprised by an unexpectedly high electric bill.
And with a platform that is tech savvy and highly user-friendly, we’re the most technologically advanced REP around.
Understanding Your Rights as a Texas Electricity Consumer
The Public Utility Commission of Texas (PUCT) is a branch of the state government that adopts the rules which companies must follow in many parts of the electricity, water, sewer, and telecommunications industries. The PUCT does not set the final price of electricity charged by retail electric providers, but it does set the delivery charges paid for the poles and wires that carry electricity from the generator to the consumer. It also sets the rates for Texas electric utilities outside the region overseen by ERCOT: Entergy Texas, El Paso Electric Company, Xcel Energy, and Southwestern Public Service.
If you have complaints about your electricity service (or water, sewer, or phone), including problems with your bill, you should contact PUCT’s Consumer Protection Division.
Power Outages and Emergency Preparedness
Texas electricity providers have no control over power outages, but at Rhythm Energy we are committed to helping make sure that the power you want and need is reliable. Because utility companies, rather than providers, are responsible for maintaining the grid, if you experience a power outage then you should contact your utility: find the right phone number and helpful tips here.
You can also stay up to date on live grid and power outage information through updates from your local utility company, as well as through ERCOT alerts. Sign up here for ERCOT grid emergency alerts to be sent to your email address.
Another way to prepare for an outage is to have a backup power option, such as a generator. These tend to be more expensive solutions, but everyone can afford to maintain an emergency outage kit – which should include water, nonperishable foods that don’t have to be cooked, hand- or solar-powered chargers for your communication devices, and a first aid kit.
Financial Assistance and Incentives
The Comprehensive Energy Assistance Program (CEAP) is an assistance program designed to assist low income households in meeting their immediate energy needs, and to educate them on how to control energy costs in the future. It provides relief to low income elderly and/or disabled households that are most vulnerable to the high cost of energy for home heating and cooling, paying up to six or eight of the highest bills during the year for non-vulnerable households and all remaining bills for vulnerable households. It also provides assistance in an energy-related crisis or during severe weather or energy supply shortages. CEAP is available in all 254 counties of Texas.
You also have access to the 30% solar investment tax credit, which is a federal incentive available in all states. Texas does not offer a local tax exemption for solar systems, but there is no state income tax in Texas in the first place.
There are also programs to help with the cost of installing energy efficient measures such as insulation, high efficiency lighting, photovoltaic systems and more. State law states that utility companies cannot directly perform these improvements directly for end-use customers. So the utilities partner with independent, third party service providers including air conditioning contractors, insulation installers, lighting contractors, and energy service companies – which receive incentive payments from the utilities for installing energy efficiency measures that result in the reduction of peak demand.
Choosing a Retail Electricity Provider
First, know what options are available in your area; not all REPs service all of Texas. Next, compare the cost of energy per kilowatt hour (kWh). Each provider should give you a rate that you can lock into the place for the life of your contract on a “fixed rate plan,” which guards against price fluctuations due to demand or other market forces. If you would like more control over your energy bill, choose a provider with a “variable rate plan,” where the rate goes up or down throughout the day and seasons, based on market prices.
Another thing to be mindful of when choosing a REP is hidden costs and fees. By paying careful attention, you can get a good estimate of what your monthly bill will be, compared to what you’re currently paying. Of course, it also helps if your REP has a commitment to no hidden costs and full price transparency (like Rhythm Energy), so you’re never hit with unexpected costs.
Lastly, consider the reputation of each potential REP. Read reviews and customer testimonials online, and talk to your neighbors. At Rhythm Energy, we’re proud to have a nearly perfect rating on Google reviews: we love it when our customers share the love with us!
Understanding Your Electricity Bill
At Rhythm Energy, we always want to be 100% clear and upfront with you about the energy you use and what you pay. So we make our bills easy to read and break them down into helpful and accurate information, beginning with the total amount due in current monthly charges, current non-electricity charges, and any previous balances. We also provide an account overview with key details related to your service, usage history, your rewards, agreement details, and an itemized list of current charges. For a handy guide to how to read your Rhythm Energy bill, read our article How Do I Read My Rhythm Bill.
Energy Saving Tips for Texas Residents
Reducing energy consumption at your home or business can range from easy DIY steps to more significant investments of money and time. Adjusting your thermostat so it cools or heats your house during off-peak hours or even installing a programmable thermostat are easy steps, as are sealing windows and doors with weatherstripping to prevent HVAC leaks, using LED lighting instead of incandescent bulbs, and running heavy appliances overnight rather than during peak demand times. More advanced and costly options include upgrading to energy efficient appliances, installing energy efficient roofing and attic insulation, and investing in a heat pump water heater. For tips on how to save more, read How to Save on Energy in Texas.
Future Trends in Smart and Renewable Power
One of the major improvements in electricity distribution that is already under way is the incorporation of Smart Grid technologies into the Texas power grid. Not only do Smart Grids allow the real-time management of energy all along the power system, sending data instantly back and forth to enable electricity providers to respond to crisis situations, they can also automatically route electricity to flow around an outage event and keep transmission lines from overheating. When an outage occurs, the Smart Grid thus keeps it contained to a smaller area.
Diversifying electric power generation into more renewable energy sources is also the way of the future. By doing so, particularly in larger cities, the state can reduce dependence on natural gas and coal power production, which is not only better for the environment, it also helps keep the grid stable.
Navigating the Texas Energy Market as a Business
Business electricity rates are cheaper than residential rates, because businesses consume more energy than homes. This is another way that deregulation of the energy market in Texas is good for residents, enabling business owners to use their higher consumption as leverage to work out better deals with REPs. Be sure to contact potential REPS to determine how they help you take control of both your business’ budget and its environmental footprint.
At Rhythm Energy, we work hard to give you options and plans, control over your power and full transparency that will make us your retail electricity provider of choice. Visit gotrhythm.com today and enter your zip code to find out what rates and plans are available to you.
FAQs
What should I consider when choosing a power plan in Texas?
First of all, consider the price per kilowatt hour of electricity offered by retail electricity providers, as well as determining if they offer fixed- or variable-rate plans that suit your energy needs. Next, be sure to unearth any hidden costs or fees – or choose a REP like Rhythm Energy, which is committed to full price transparency and no hidden costs, ever. Also look at the REP’s reputation through online reviews and customer testimonials. For more hints on choosing a power plan, check out How to Shop for Energy in Texas.
How do I compare energy rates effectively?
Every REP will provide you with an Electricity Facts Label, or EFL, that details the price of energy rates, the type of electricity plan (fixed or variable), the length of your contract, any termination or other fees, and renewable energy associated with your plan. For an in-depth guide on how to read and compare EFLs from providers, read How to Read an Electricity Facts Label.
What are the benefits of using renewable energy in Texas?
Not only is renewable energy production better for the environment, cutting down on CO2 emissions and dependence on fossil fuels, but it also is good for the aging infrastructure of our power grid. Thanks to long-term storage batteries, electricity generated by wind and solar power can be stored even when the wind is not blowing or the sun is not shining, which is why, at Rhythm Energy, we can offer plans that are 100% renewable energy.
Can I change my power plan if my needs change?
You can change your energy options in Texas by looking for a new provider, comparing rates, and then determining if it is worthwhile to terminate any existing contract. Be sure to review your Electricity Facts Label (EFL) to see if you’ll incur early termination fees by switching to a new energy provider before your contract is completed.
