How to Choose Your Electric Company

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How to Choose Your Electric Provider

As a consumer advocate covering Texas electricity for over a decade, I’ve witnessed countless Texans struggle to navigate the complex world of retail electricity providers.

In this comprehensive guide, I’ll share proven strategies for selecting the best electricity provider for your needs and avoiding common mistakes that can cost Texans hundreds of dollars annually.

TLDR: In Texas, choose the electricity provider with the best price for your specific usage pattern. Retail providers don’t affect service reliability, so focus on finding the plan structure and company that fits your consumption habits and preferences.

Understanding Electricity Companies vs. Utilities

What Retail Electricity Providers Do

Your retail electricity provider is essentially a billing company that:

• Purchases electricity from generators at wholesale prices
• Resells it to you at retail rates
• Handles customer service and billing
• Offers different plan structures and contract terms

Important: Your retail provider does NOT control your electricity quality or service reliability.

What Utility Companies Handle

Your utility company maintains the physical infrastructure:

• Power lines and poles
• Meters and transformers
• Power restoration during outages
• Grid maintenance and upgrades

Key insight: Since utilities handle reliability, you can freely shop for the best retail provider without worrying about service quality.

Texas Utility Companies by Service Area

Lubbock Power & Light (LP&L) – Lubbock and South Plains region

Oncor Electric Delivery – Dallas-Fort Worth metroplex, north, central, and west Texas

CenterPoint Energy – Houston metropolitan area and surrounding regions

AEP Texas – Southern and western Texas (Corpus Christi, Abilene, McAllen, Laredo)

Texas-New Mexico Power (TNMP) – Areas near Houston, Dallas, Fort Worth, and the Gulf Coast

Are you moving in?

If you’re moving into a new home, you won’t have a usage history to rely on when choosing a plan.

A kWh calculator can help you estimate your usage and find the best plan for your needs.

Start electric service in Texas →

The Key Factors in Choosing a Provider

1. Price for Your Usage Pattern (Most Important)

The cheapest advertised rate rarely equals the cheapest bill. Here’s why:

Usage-Dependent Pricing

• Low usage (under 500 kWh): Base charges matter more than energy rates
• Average usage (1000-1200 kWh): Standard plan structures work well
• High usage (2000+ kWh): Look for plans with lower rates at higher usage levels

Seasonal Variations

• Summer months: AC usage can double or triple consumption
• Winter: Heating needs vary by home type and efficiency
• Spring/Fall: Lowest usage periods for most homes

2. Plan Structure and Contract Terms

Fixed-Rate Plans

• Same rate throughout your contract
• Predictable monthly bills
• Protection from market price spikes
• Best for: Most Texas families seeking stability

Variable-Rate Plans

• Rates change monthly based on market conditions
• Can start low but may increase without notice
• No long-term price protection
• Best for: Short-term situations or market-savvy consumers

Indexed Plans

• Rates tied to a published index (like natural gas prices)
• More predictable than variable, less stable than fixed
• Best for: Those who understand market fundamentals

3. Company Size and Financial Stability

Large National Providers

• Examples: TXU Energy, Reliant, Direct Energy
• Pros: Financial stability, extensive customer service, established operations
• Cons: May not offer the lowest rates, and less personalized service

Regional Players

• Examples: Gexa Energy, Green Mountain Energy, 4Change Energy
• Pros: Often competitive pricing, Texas-focused service
• Cons: Smaller customer service teams, less name recognition

Smaller Retailers

• Examples: Various local providers
• Pros: Often the lowest rates, flexible terms
• Cons: Higher business risk, limited customer service resources

4. Customer Service Quality

What to Research:

• Average hold times for phone support
• Online account management capabilities
• Billing accuracy and dispute resolution
• Contract flexibility and cancellation policies

Warning signs:

• Consistently poor online reviews
• High complaint ratios with the Public Utility Commission
• Difficult cancellation processes
• Hidden fees or misleading billing practices

Types of Texas Electricity Companies

Traditional Retail Providers

Focus on standard residential and commercial plans with conventional pricing structures.

Examples: TXU Energy, Reliant Energy, Direct Energy, Cirro Energy

Best for: Customers wanting established providers with predictable service

Green Energy Specialists

Emphasize renewable energy sources and environmental responsibility.

Examples: Green Mountain Energy, Gexa Energy, Chariot Energy

Best for: Environmentally conscious consumers willing to potentially pay a premium for clean energy

Technology-Forward Providers

Offer smart home integration, app-based management, and innovative pricing.

Examples: Tesla Electric, Octopus Energy, Rhythm Energy

Best for: Tech-savvy customers with smart home devices or electric vehicles

Value-Focused Providers

Compete primarily on price with streamlined operations and basic service.

Examples: Discount Power, 4Change Energy, various smaller retailers

Best for: Price-sensitive customers comfortable with basic customer service

Specialty Providers

Serve specific customer segments or offer unique plan structures.

Examples: Payless Power (prepaid), various commercial-focused providers

Best for: Customers with specific needs like poor credit or unique usage patterns

How to Calculate True Plan Costs

Step 1: Gather Your Usage Data

Collect 12 months of electricity bills showing your monthly kWh consumption.

If you’re moving: Estimate based on:

• Square footage of your home
• Number of occupants
• HVAC system efficiency
• Regional climate data

Step 2: Read the Electricity Facts Label (EFL)

Every plan must provide an EFL showing:

• Base monthly charge
• Energy charges per kWh
• Any usage-based tiers or credits
• Contract length and cancellation fees

Step 3: Calculate Monthly Costs

For each month of usage:

Monthly Cost = Base Charge + (kWh Usage × Energy Rate) + TDU Charges + Taxes

Don’t forget:

• Bill credits (often have usage requirements)
• Seasonal rate variations
• TDU (utility) delivery charges
• State and local taxes

Step 4: Compare Annual Totals

Add up the costs for 12 months for each plan you’re considering.

Shortcut: Utilize Live Link to automate this entire process and receive personalized recommendations tailored to your actual usage.

Red Flags to Avoid

Misleading Marketing Tactics

Too-Good-to-Be-True Rates

• Advertised rates require perfect usage patterns
• Temporary promotional pricing that increases later
• Rates that only apply to specific usage ranges

Door-to-Door Sales

• High-pressure tactics and rushed decisions
• Verbal promises are not reflected in contracts
• Switching without proper authorization

Confusing Plan Structures

• Complex tier systems with penalties
• Bill credits with impossible requirements
• Variable rates with no cap or protection

Company Warning Signs

Financial Instability

• Recent bankruptcy or ownership changes
• Poor credit ratings or financial reports
• History of sudden rate increases

Poor Customer Service

• Consistently negative online reviews
• High complaint ratios with regulators
• Difficult-to-reach customer support

Making Your Decision

Step 1: Narrow Your Options

Based on your research, identify 3-5 providers that offer:

• Competitive pricing for your usage pattern
• Acceptable contract terms
• Reasonable customer service ratings
• Financial stability

Step 2: Calculate True Costs

Use your 12-month usage history to calculate the total annual cost for each finalist provider.

Pro tip: Don’t just compare advertised rates – use actual consumption data for accurate projections.

Step 3: Consider Non-Price Factors

• Customer service quality and availability
• Contract flexibility and cancellation policies
• Environmental impact (if important to you)
• Additional features or benefits

Step 4: Make the Switch

Once you’ve chosen a provider:

• Read the contract carefully before signing
• Note your contract end date to avoid automatic renewals
• Set a calendar reminder to shop again before your contract expires
• Keep your first few bills to verify correct pricing

Special Situations

For New Residents

Without usage history, focus on:

• Plans with low rates across different usage levels
• Shorter initial contracts (6-12 months) to reassess after establishing usage patterns
• Providers that offer satisfaction guarantees

Check out Your Move-In Electricity Checklist →

For High-Usage Homes

Look for:

• Plans with better rates at higher usage tiers
• Providers offering time-of-use plans if you can shift usage
• Fixed rates protect against seasonal price spikes

For Low-Usage Homes

Prioritize:

• Plans with low or no base charges
• Simple rate structures without complex tiers
• Providers with good customer service, since savings opportunities are limited

For Green Energy Advocates

Consider:

• 100% renewable energy plans (expect to pay a premium)
• Providers with solar buyback programs, if you have panels
• Companies with firm environmental commitments beyond just energy sourcing

When to Switch Providers

Contract Expiration – Review your options 30-45 days before your contract ends to avoid expensive month-to-month rates.

Rate Increases – If your provider raises rates significantly, calculate whether paying an early termination fee makes financial sense.

Service Issues – Poor customer service or billing problems may justify switching, even with cancellation fees.

Life Changes – Moving, significant appliance changes, or changes in family size may warrant reevaluating your plan.

Your Action Plan

For most Texans, the savvy approach is:

1. Understand your usage pattern – gather 12 months of bills or use estimation tools
2. Focus on total cost, not advertised rates – calculate what you’ll pay annually
3. Choose established providers for stability – unless you find compelling savings elsewhere
4. Prefer fixed-rate plans – for predictable budgeting and protection from market spikes
5. Read contracts carefully – understand cancellation policies and rate change provisions
6. Set reminders to shop regularly – markets change, and better deals emerge

The quickest way: Use Live Link™ to automatically compare all providers based on your actual usage and get personalized recommendations in minutes.

Make an Informed Decision

Choosing the right electricity provider doesn’t have to be overwhelming. Focus on finding the best price for your specific usage pattern from a financially stable company with acceptable customer service.

Remember: since your retail provider doesn’t affect service reliability, you’re free to choose based on price and service quality without worrying about power outages or electricity quality.

Take the time to understand your options, calculate true costs, and make an informed decision. The few hours you invest in research could save you hundreds of dollars annually.

Compare All Texas Providers Based on Your Usage →

How to Choose an Electric Provider FAQs

Choosing the right electricity provider can be daunting, especially given the numerous options available in the Texas market. Here are some frequently asked questions to help you make an informed decision.

Texas Electricity Companies