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Texas winter electricity guide
Texas residential electricity rates have stabilized after summer 2025 peaks, creating a favorable window for consumers to lock in competitive fixed-rate plans heading into winter 2025-2026. Rates currently average 15.2-17.0¢/kWh, including delivery costs, with competitive 12-month fixed plans available at 11-13¢/kWh—roughly 12% below the national average. However, ERCOT warns of “slightly higher reliability risk” this winter due to growing demand from data centers and the potential for extreme cold events similar to patterns preceding Winter Storm Uri.
Current rates favor early lock-in before winter peaks
The Texas electricity market has cooled significantly from summer 2025 highs. While June 2025 saw 12-month plans averaging 16.5-17.0¢/kWh, fall rates have dropped to 14.9-16.2¢/kWh—a decline of roughly 10-15%. This seasonal pattern makes late fall an acceptable, though not optimal, time to secure a fixed-rate contract.
Regional rate differences matter. Oncor (Dallas area) averages 16.28¢/kWh, while CenterPoint (Houston) runs higher at 16.74¢/kWh. AEP Texas North customers pay the most at 17.98¢/kWh. These differences stem from infrastructure costs and delivery fees that remain constant regardless of which retail provider you choose.
The wholesale market supports moderate retail pricing through winter. ERCOT North Hub prices hit $28.41/MWh in October 2025, down 14.5% from September’s $33.23/MWh. Natural gas prices remain relatively low, and solar capacity additions continue suppressing wholesale costs during daylight hours. However, forward contracts for 2026-2027 trade above $50/MWh, reflecting market uncertainty around growing demand from AI data centers and potential extreme weather events.
Texas homes consume 23% more electricity than the national average
The average Texas household uses 1,094-1,176 kWh monthly—about 23-25% above the national average of 863-886 kWh. This premium reflects Texas’s larger homes (averaging 2,170 square feet) and its extreme climate.
| Season | Typical Monthly Usage | Typical Bill at 15.5¢/kWh |
|---|---|---|
| Summer peak | 1,200-1,400+ kWh | $186-217 |
| Winter | 800-1,000 kWh | $124-155 |
| Spring/Fall shoulder | 700-900 kWh | $109-140 |
Heating type dramatically affects winter bills. Approximately 60-61% of Texas homes use electricity as their primary heating source—far above the national rate of 39%. Heat pumps deliver 2-3x better efficiency than gas furnaces in Texas’s typically mild winters, operating optimally above 40°F. However, when temperatures drop below 35°F, efficiency decreases significantly, and auxiliary electric resistance heating may kick in, leading to higher bills.
For most Texas homeowners, heat pumps represent the best long-term investment. Dallas-Fort Worth residents facing occasional hard freezes should consider dual-fuel systems that use heat pumps above 35-40°F and switch to gas backup during extreme cold—offering the best of both efficiency and reliability. An HVAC contractor can assess your home’s specific needs and recommend the right system.
Shopping strategies: When and how long to lock in
Fall and spring remain the optimal shopping windows, with rates averaging 8-12¢/kWh in March-May and 9-13¢/kWh in September-November. Winter falls in the middle tier—acceptable but not ideal. If your contract expires mid-winter, consider a 3-6 month “bridge” plan to shift your renewal cycle to spring.
Expert recommendations on contract length have shifted toward longer terms. Energy analysts at ElectricityPlans note that “24-36 month contracts are often the cheapest and protect you against inflation,” pointing to rising demand from data centers and bitcoin mining as factors likely to push future rates higher. Forward market pricing for 2026-2027 currently trades below 2025 levels, suggesting that longer-term contracts may lock in favorable rates before potential increases.
Term length trade-offs:
- 12 months: Most popular choice; ~$150 ETF; balances flexibility with stability; best for renters or uncertain situations
- 24 months: $200-295 ETF; recommended by most experts for homeowners seeking rate protection
- 36 months: $200-395 ETF; maximum protection, but harder to exit if better rates emerge
The Electricity Facts Label (EFL) remains your most critical shopping tool. Compare rates at your actual usage level—not just the default 1,000 kWh—since “bullseye” plans can appear cheap at one threshold but expensive at your actual consumption. Watch for bill credit plans that offer $25-50 discounts only if usage hits specific targets; miss the threshold, and you’ll pay higher effective rates.
ETF-free plans exist, but come with trade-offs
Early termination fees in Texas typically range from $150 to $300, with 36-month contracts reaching $395 at some providers. Two main structures dominate: flat-rate ETFs (a fixed amount regardless of when you cancel) and pro-rated fees (a fee of $15-20 per month remaining on your contract). Pro-rated structures benefit customers who may need to exit later in their term.
Texas law provides necessary ETF exemptions. Under §25.475(c)(2)(C), all providers must waive termination fees when you move to a new address—provide your forwarding address and proof of relocation. Additional exemptions apply for switching within 14 days of contract expiration and for homes damaged by natural disasters.
ETF-free variable-rate plans exist, but typically cost more per kWh and expose customers to monthly price swings. Some providers offer 30-60 day satisfaction guarantees—Rhythm Energy’s “Easy Energy Promise” allows penalty-free departure within the first month. For customers prioritizing flexibility, these trial periods may offer the best balance of protection and low commitment.
Practical winter savings start with thermostat settings
The Department of Energy recommends setting thermostats to 68°F while home and 62-66°F when away or sleeping. Each 1-degree reduction maintained for 8+ hours saves approximately 1% on heating costs; lowering temperatures 7-10°F for 8 hours daily can reduce heating bills by up to 10%.
Air sealing delivers the highest return on investment in weatherization. Seal gaps around doors, windows, plumbing penetrations, and attic bypasses with caulk or weatherstripping. The DOE estimates average savings of $300 annually from comprehensive air sealing, with a bonus of approximately $1,000 in home value.
Post-Winter Storm Uri lessons highlight Texas homes’ vulnerability to extreme cold. Insulate exposed pipes in attics, garages, and exterior walls. Upgrade attic insulation to R-38 or better if it is currently R-22 or lower (per Oncor’s rebate program requirements). Consider storm windows or plastic film insulation for single-pane windows—major heat loss points during cold snaps.
Smart thermostats unlock additional savings through utility demand response programs. Oncor’s “Take A Load Off Texas” program achieved nearly 300 megawatts of demand reduction in 2024 by allowing brief thermostat adjustments during peak periods. Participants maintain control over their comfort while earning incentives and supporting grid stability.
Federal tax credits expire December 31, 2025
The “One Big Beautiful Bill” passed in July 2025, terminating federal energy efficiency tax credits after this year—a significant change from the previous 2032 expiration. Homeowners considering upgrades should act before year-end to capture remaining benefits.
Available credits through December 31, 2025:
- Heat pumps: Up to $2,000 (30% of cost)
- Central air conditioners: Up to $600
- Insulation and air sealing: Up to $1,200
- Windows and skylights: Up to $600
- Exterior doors: $250 each ($500 total)
- Home energy audit: Up to $150
- Solar PV and battery storage: 30% credit with no dollar cap
Texas utility rebates supplement federal credits. Oncor Electric Delivery offers $300- $3,500 for high-efficiency HVAC systems (SEER 14.3 or higher), ceiling insulation incentives, and up to $9,000 for combined solar-plus-battery installations. CenterPoint Energy operates similar programs in the Houston area. Low-income households may qualify for free weatherization through the Texas Weatherization Assistance Program; contact 211Texas.org or call 2-1-1.
ERCOT outlook warrants preparation for potential volatility
ERCOT’s winter assessment indicates “slightly higher reliability risk” compared to last winter, with atmospheric patterns similar to conditions preceding Winter Storm Uri. Meteorologists expect a warm winter overall, punctuated by potential extreme cold events—a pattern seen in five of the last eight Texas winters.
Grid reliability faces pressure from several directions. Demand from data centers, AI operations, and cryptocurrency mining continues to accelerate faster than new generation capacity can come online. While the Texas Energy Fund has finalized loans for approximately 3,564 MW of new dispatchable generation, most projects won’t deliver power until 2026-2029. Only 9 MW of net gas-fired capacity is scheduled for 2025.
Battery storage and solar provide limited support during winter morning peaks when demand typically spikes. ERCOT notes that battery efficiency drops to approximately 38% during winter storms, versus 57% under normal conditions. Consumers should maintain emergency preparedness supplies and consider backup heating options for potential grid stress events.
In Summary
Texas electricity consumers heading into winter 2025-2026 face a market that rewards proactive shopping. Current rates of 11-13¢/kWh for competitive fixed plans represent meaningful savings versus summer peaks, though spring remains the optimal shopping season. The entry of Tesla Electric and the expansion of Octopus Energy introduce innovative options for tech-savvy homeowners, particularly those with solar panels, batteries, or electric vehicles.
The convergence of expiring federal tax credits (December 31, 2025), ERCOT’s elevated winter reliability concerns, and forward market signals suggesting potential future rate increases creates urgency for action. Homeowners should prioritize weatherization investments this year to capture remaining credits, lock in 24-month fixed contracts to hedge against market uncertainty, and prepare homes for potential extreme weather events. In Texas’s deregulated market, informed consumers who shop strategically and optimize their home efficiency can secure winter bills well below state averages.
What length plan should I choose?
A common question we get when switching is the contract term.
Is it best to choose a 12, 24, or 36-month plan? The length of your energy plan depends on your individual needs and preferences.
A 12-month plan offers stability and predictability, with the flexibility to shop again in 12 months.
A 24-month plan offers a more extended period of stability in energy rates, but you may miss out on lower bills if rates go down.
A 36-month plan offers the most extended period of rate stability. This term is ideal if you find a rate you like and prefer to lock that in for an extended period.
It can be challenging to predict electricity prices as supply and demand, fuel prices, government regulations, and weather conditions influence them. The energy market is highly dynamic and constantly changing, making it difficult to predict future prices accurately.
Ultimately, assessing your energy needs and considering the current market rates is best before deciding on a plan length. You may also want to consider the plan’s flexibility and the penalty fees for early termination.
When can I switch providers?
While you can switch electricity plans at any time, it is essential to note that some providers may charge an early termination fee (ETF) if you end your contract before the end of the term.
The ETF is designed to compensate the provider for any losses they may incur if they end the contract early.
Before switching plans, be sure to review the terms and conditions of your current contract and consider the ETF fees involved.
In some cases, the potential savings from switching to a new plan may outweigh the ETF fees, so it’s essential to do the math and weigh your options carefully. You can quickly do the math with ComparePower by plugging in your kWh usage and letting us crunch the numbers for you.
It is also worth noting that some providers may offer ETF-free plans, so be sure to consider all your options and choose the plan that best meets your needs and budget.
Starting service for a new home
If you don’t have access to the previous usage history for your new home, you can estimate your electricity usage. You can also ask the last landlord for a copy of their 12-month kWh usage history.
Tips to maximize savings this winter
Aside from finding the perfect energy plan, several other tips can help you maximize your energy savings this winter.
First, familiarize yourself with the different types of energy plans and rates available. There are fixed-rate, variable-rate, and prepaid plans, each with advantages and disadvantages.
Conserving energy and reducing usage during winter are other ways to lower energy bills. Simple changes, such as lowering your thermostat, sealing drafty windows, and using energy-efficient lighting, can help you save electricity.
Finally, it’s essential to regularly review and adjust your energy plan to ensure you are always getting the best deal.
Our Texas-based energy experts are here to help:
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Call 855-441-3030 (Mon-Fri: 8:30 AM – 6:30 PM Sat: 9 AM – 4:30 PM)
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