The Best Texas Electricity Companies
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Since 2002, the majority of Texans have had to choose their own Retail Electric Provider (REP) – the middleman that buys electricity wholesale, then sells it to you, the consumer. According to the Public Utility Commission of Texas’ 2017 report, the Lone Star state is “the national leader in competitive residential, commercial, and industrial offerings,” which means there are well over 200 providers bidding for your attention.
We'll show you how to pick the best Texas electricity company and plan for you from a sea of similar options.
To do so, we used five of the state’s largest electricity companies to explore six things you'll have to evaluate when you're comparing plans and providers: We’ll walk you through customer satisfaction scores, running the numbers on rates, and calculating the impact of different fees, discounts, and contract types. We'll weigh in on extra perks, like points, and green energy too.
At the end of the day, though, our take on these five Texas REPs is just a place to start. You’ll still need to wrap your head around your home’s energy use, scour the fine print, and crunch the numbers on the plans and providers available in your area. Start shopping around using our ZIP code tool.
How to Find the Best Texas Electricity Companies
Using four ZIP codes from across Texas, we analyzed all the plans we could find from five Texas energy providers: Direct Energy, Just Energy, Reliant Energy, StarTex Power, and TXU Energy.
While there are some outliers, we ultimately discovered more similarities than differences. The real nuance from provider to provider and from plan to plan is how nicely, rates, fees, and discounts play with your home's typical energy use. In that way, picking an energy plan is a lot like picking a credit card.
Just like credit card companies, all five Texas energy providers we looked at offer a wide range of options — typically a couple renewable energy plans, a few month-to-month plans with variable rates, and between four and 10 fixed-rate plans with contracts available for anywhere from six months to three years.
The majority of providers quote between 7.0 and 13.0 cents per kilowatt hour (kWh) — all within 4.0 cents of the average retail cost of energy in Texas (11.16 cents per kWh).
And across providers, similar plans follow similar patterns: Longer contracts have higher cancellation fees. Green energy plans tend to be slightly spendier. Wondrous-sounding discounts, like free energy weekends, are usually offset with higher rates.
We used each of our five Texas providers to showcase a different aspect of evaluating if an electricity company — and any of its plans — is right for you.
Start by looking for high customer satisfaction.
Some good news: According to J.D. Power’s 2016 survey on retail electric providers (its most current survey of the space), Texas has the highest overall satisfaction with retail electric providers out of any state. And because rates, plans, and offers can be so similar from provider to provider, customer satisfaction scores are a great way to break a tie. Think of it like choosing who to hire when you have two candidates with similar resumes — you’re going to pick the person with the glowing references.
Of the five Texas energy companies we looked at, StarTex Power is by far the standout, earning four out of five J.D. Power Circles and scoring 749 out of 1,000 for overall customer satisfaction. That’s a full Power Circle and 15 points higher than its closest competitor, Direct Energy, and well above the Texas average of 730 points.
Break down the scoring into each category of J.D. Power’s customer satisfaction survey — enrollment and renewal, billing and payment, price, communications, corporate citizenship, and customer service — and you can see where StarTex Power’s strong reputation comes from.
StarTex Power's Customer Satisfaction Outshines the Competition
Source: J.D. Powers Retail Electric Provider Residential Customer Satisfaction Study (2016)
Another nice resource the Texas government supplies is a breakdown of customer complaints by type and by provider. StarTex Power, under its parent company Constellation, had only 38 total complaints between March and August 2017 — just over a third as many as the 110 filed against TXU.
The complaints filed against providers aren't a perfect mirror of the J.D. Power customer satisfactions scores. Just Energy, which earned only two J.D. Power Circles and earned the second-lowest score, had only 21 complaints recorded with the Public Utility Commission. But it's helpful to view these complaints in aggregate: Over 50 percent of the 1,119 total complaints fall under "billing" — another reason to seek out a provider with high customer satisfaction in that area in particular.
Then read the fine print — and do the math — to find out how much you're really going to pay.
When you shop for electricity plans, you're typically served up a slew of options with catchy names and the price per kWh you'll pay.
Or will you?
The real pricing details live in each plan's Electricity Facts Label (EFL), which breaks down the cost of the energy you're buying, additional charges, and the rules for any discounts you'll earn or fees you'll have to pay. If advertised estimated price is a plan's best case scenario, the EFL is the stone-cold truth.
For example, if you use a small amount of energy each month, you expect to be rewarded — right? Unfortunately, nearly all electricity plans from Texas REPs are advertised as costing more per kWh the less electricity you use. It’s a little like buying in bulk: Providers often discount your bill when you cross certain kWh thresholds. For instance, one 12-month plan from StarTex Power quotes 8.1 cents per kWh for 1,000 kWh a month and 8.8 cents for 2,000 kWh per month, but 12.1 cents for 500 kWh per month. Why the difference? Customers get $35 back each month if they pass 1,000 kWh of use, and another $15 back per month if they cross 2,000 kWh. In this case, using half as much electricity as your neighbor on the same plan wouldn’t get you half the bill.
Using More Energy Will Often Get You a Better Deal
|500 kWh / Month||1,000 kWh / Month
|Price of Energy||7.0 cents per kWh||7.0 cents per kWh|
|Delivery Charge||4.0313 cents per kWh + $5.47||4.0313 cents per kWh + $5.47|
|Monthly Price of Energy||$61||$116|
|Usage Credit for Using 1,000 kWh||—||-$35|
|Total Monthly Bill||$61||$81|
|Price per kWh||12.1 cents||8.1 cents|
When we sorted through plans from our five providers to see how their packages compared, Reliant Energy stood out. It offers a number of plans that don’t offer incentives to use more energy.
We did a deeper dive with a Houston ZIP code on two of Reliant’s lowest-advertised options — the Digital Discount 12-Month Plan at 10.1 cents per kWh and the Truly Free Weekends 12-Month Plan at 10.7 cents per kWh — to see which could provide bigger savings for homes that only use about 500 kWh of energy in a month.
As they’re advertised, the Digital Discount plan appears to save you $4 — but only if you use 32 percent of your energy on the weekends, which is the stat Reliant used to create the average price it advertises. Say you often travel for business during the week, and are only home cranking the air conditioner on weekends. If your energy use skews to 55 percent weekend use (for Reliant, that means 8 pm on Friday through 12 am Monday), suddenly Truly Free Weekends becomes a much better deal.
Reliant's Digital Discount Plan Averages $50/Month for 500 kWh
|Price of Energy||5.2 cents per kWh|
|Discount||-0.2 cents per kWh|
4.0323 cents per kWh + $5.47
|Total Monthly Bill||$50|
|Price per kWh||10.1 cents|
Truly Free Weekends Isn't the Best Deal — Unless You Use More Than 32%
|32% Energy Use on Weekends||55% Energy Use on Weekends|
|Price of Weekday Energy||10.1 cents||10.1 cents|
|Price of Weekend Energy||Free||Free|
|Weekday Delivery Charge||4.0323 cents per kWh||4.0323 cents per kWh|
|Weekend Delivery Charge||Free||Free|
|Monthly Delivery Charge||$5.47||$5.47|
|Total Monthly Bill||$54||$37|
|Price per kWh||10.7 cents||7.4 cents|
Likewise, if you opt for a plan like our StarTex Power example, but in some months only hit 990 kWh of energy use, the $35 discount for cresting $1,000 kWh won't apply — and your bill is going to show it. Picking the right plan for you requires two things: an intimate knowledge of your home’s typical energy use, and a critical eye on any plan’s fine print.
According to the U.S. Energy Information Administration, the average household in Texas uses about 15,000 kWh of electricity per year — 26 percent more than the national average, “but similar to the amount used in neighboring states.” That said, the only way to know your personal average energy consumption is by looking at your electricity bills over the course of a year (you want to accommodate all weather conditions) and understanding both your overall usage, as well as if you use more or less during certain months.
Know your fees.
Pretty much every energy provider is going to have some sort of fee hidden in at least one of its plans. It doesn’t mean it’s a bad plan — just like an annual fees for a credit card doesn’t automatically make it a bad credit card — but it's important to know how fees will impact your bill as you parse through the different options in your area.
There are four that make regular appearances on the EFLs of all energy providers.
- TDU Delivery Charge: TDU stands for transmission and delivery utility — in other words, the utility company in your area that is actually piping the energy from the power generation companies into your home. (Remember, REPs in Texas are just the middleman.) The TDU delivery charge is set by the utility and is consistent from plan to plan and provider to provider within its service areas. For example, AEP , the TDU for Corpus Christi, charges the same delivery fee for all TXU, Direct Energy, and Reliant plans. You don't typically get a choice in utility company, and therefore, these fees are pretty much unavoidable, non-negotiable, and won't factor into choosing an electricity plan or provider.
- Minimum Usage Fees: Often set at or around 1,000 kWh/month, these fees mean you’ll always pay for at least that amount — even if you only use, say, 800 kWh of electricity some months. It sounds nasty, but it’s only something to be concerned about if your electricity bills historically show you hover right around that minimum use threshold. If you’re electricity use always exceeds that amount, it’s like it’s not even there.
- Base Charges: An upfront cost that creates the foundation of each billing cycle. A good rule of thumb: No base charge is usually better for your bottom line, but it’s worth it to do the math.
- Cancellation Fees: Many plans build in a monetary safety net in the event that you break your contract. You'll usually only see these fees attached to fixed-rate plans, and they can range anywhere from $50 to $300.
Like we said, fees don’t necessarily make for a bad plan — although it’s worth it to do the math to see if you can save with another provider. For example, compare TXU Energy’s Simple Rate 12 plan with its $9.95 base charge, alongside Direct Energy’s Live Brighter 12 plan with a smaller base charge, and Reliant’s Digital Discount plan with no base charge. We’ll use a Corpus Christi ZIP code and assume 1,000 kWh/month of energy use.
Fees Won't Always Have a Big Impact on Your Bill
|TXU Energy||Direct Energy||Reliant|
|Price of Energy||5.6 cents per kWh||4.6 cents per kWh||4.7 cents per kWh|
|Discount||—||—||-0.2 cents per kWh|
|Delivery Charge||$4.384 cents per kWh + $9.00||$4.384 cents per kWh + $9.00||$4.384 cents per kWh + $9.00|
|Total Monthly Bill||$119||$104||$98|
The discount of Reliant’s Digital Discount plan gives it an edge, but not by much compared to Direct Energy. If Direct Energy has additional perks that appeal to you — it’s customer satisfaction is higher, for example, or you want in on its rewards points — that $5 base charge is pretty negligible.
Other fees that are similarly unavoidable, but worth being wary of: Fees for late or returned payments, and fees for payments processed over the phone. All fees will be disclosed in the Disclosure Chart section of the plan’s EFL, or in the plan’s Terms of Service Agreement.
And factor in perks like rewards points.
If your monthly use hovers around the 2,000 kWh mark, you’ll be spending around $2,000 per year on electricity bills no matter which REP you choose. With that level of investment, you may be tempted by an offer to get something extra in return — like rewards. Direct Energy is notable because it’s a part of American Express’s Plenti rewards program. For every dollar you spend on your Direct Energy plan, you earn a “Plenti point,” which you can then redeem on purchases with retail partners like Macy’s, AT&T, and Exxon.
Rewards Mean Free Money — But Not as Much as You Might Hope
|Price of Energy||4.2 cents per kWh|
|Delivery Charge||3.651 cents per kWh + $5.25|
|Total Monthly Bill||$167 (8.4 cents/kWh)|
|Total Yearly Bill||$2,004|
|Total Plenti Points||2,004|
|Total Plenti Value||$20|
Twenty bucks compared to a $2,000 bill? Not much to write home about, but hey — it’s free money. And, true, you’ll still get some free money when you use less energy, but rewards only really seem reward-y if you're shelling out big bucks. That same Direct Energy plan only yields about $6 in Plenti points per year if you use 500 kWh of electricity each month.
Decide how green you want to go.
Every Texas REP we looked at offers energy plans that offset at least some of their energy with renewable sources like wind and solar. Texas is one of the leading states in wind energy generation, and as of 2016, 13 percent of the state’s energy was coming from renewable sources.
Shopping for a plan based on renewable sources is no different than shopping for any other kind of plan — you calculate your costs the same way, look for the same fees, and weigh in customer satisfaction and other perks. The one thing that’s different is also looking at what percentage of your energy comes from renewable content in the EFL. That number can swing from as low as 0 percent all the way up to 100 percent, with the majority of plans that partially offset energy with renewable content hovering around 15 percent.
Just Energy is unique in that customers have the option to select how much renewable content they want in any given plan, in 20 percent increments from 0 to 100. Customers also have a payment plan choice: either pay an additional $5 per month for 100 percent renewable energy, or incrementally increase how much they pay per kilowatt hour.
And just like with any plan, it’s worth it to do the math to see how different scenarios will affect your bill. Take, for example, a home in Sweetwater that uses about 1,000 kWh of energy per month, and is interested in the Texas Essentials 12 plan. Zero percent renewable energy is the cheapest option — but by committing to a $5 monthly charge for its 100 percent “JustGreen” option, it’s actually cheaper than the 60 percent hybrid renewable option.
It Can Be Cheaper to Go 100% Green Than Offset Only Part of Your Energy Use
|0% Renewable||100% Renewable Option A||100% Renewable Option B||60% Renewable Option B|
|Cost of Energy + Delivery||10.7 cents per kWh||10.7 cents per kW||10.7 cents per kW||10.7 cents per kW|
|Offset Costs||—||—||1 cent per kWh||0.6 cents per kWh|
|Additional Monthly Fee||—||$5||—||—|
|Price per kWh||10.9 cents||11.4 cents||11.9 cents||11.5 cents|
The real takeaway: Right now, renewable energy is more expensive than other forms of energy, but not really by much.
And finally, pick a contract type — fixed, variable, or indexed.
All providers offer a variety of contracts designed to appeal to different types of consumers.
- Fixed-Rate Plans: These plans are steady and predictable; the price per kWh you sign up for will remain that same for the entirety of your contract. (The only changes in your bill will be from forces outside of your REP's control, like changes in TDU fees, or changes in federal, state, or local laws.) Often fixed-rate plans will have a slightly higher price per kWh than others, but you're paying for the predictability. They're great if you live by your budget – and even greater if you happen to sign up when rates are low. The fixed-rate plans of our five Texas providers typically started at 12 months, with some extending up to three years, but we spotted a couple from Reliant that offered fixed rates for six month contracts as well.
- Variable Rate Plans: Designed as month-to-month contracts, these plans are in total control of your energy provider, which can shift the price you pay per kWh at its discretion. This means you, the consumer, are in a better place to reap the benefits when the energy market falls — but it also means you're at risk for hikes in prices, whether as a result of natural disasters or the provider's bottom line. Variable plans always offer a full year of price history to show the average price per kWh so you can get a sense of what you're getting into (like this one from Reliant) and know this: Variable plans don't have cancellation fees. You can cut your service at any time — a huge incentive for REPs to keep their prices reasonable.
- Indexed Plans: Very similar to variable rate plans, except that changes in rates aren't at the provider's discretion. Rather, they are based on a pricing formula that's tied to a publicly available index. For example, TXU's MarketEdge plan is indexed to the NYMEX natural gas price — as that rises and falls, so will your rates.
Which ones the best? Like all things energy, it depends. Do you prefer predictability, or do you like the idea of potentially saving some cash by monitoring the market? Our (albeit conservative) recommendation: Fixed rate is probably best. Energy prices are on the rise — the U.S. Energy Information Administration predicts a 3 percent increase in residential electricity prices in 2018.
Did You Know?
If you sign up for a fixed-rate plan, ask what happens at the end of your contract.
Some providers will automatically enroll you into a month-to-month contract if your original contract expires and you don't re-up or cancel service — and those rates tend to be much higher.
If you want to switch providers, you don't have to "break up" with your current REP.
The Electric Reliability Council of Texas (ERCOT) does it for you. When you sign up for a plan with a new provider, ERCOT will send you a mailer confirming the switch. You have three days upon receiving the mailer to change your mind. If you don't, you'll have a new provider within seven days, and ERCOT will notify your old provider. Just remember, if you abandon a contract before it's complete, you will be on the hook for any fees or penalties detailed in its Terms of Service.
For power outages or down wires, contact your utility, not your REP.
Remember, the TDU that services your area is responsible for delivering the electricity you pay for into your home. They're also the ones who are in charge of safety, repairs, and technical troubleshooting.