Fixed vs Variable Electricity Rates in Texas: Why Fixed-Rate Plans Protect Your Bill
Under PUCT Substantive Rule §25.475, a Fixed-Rate Plan locks the Retail Electric Provider’s energy charge (¢/kWh) and base charge for the entire contract term (at least 3 months), changing only if the PUCT approves a regulated TDU delivery tariff adjustment. A Variable-Rate Plan is a month-to-month product whose energy rate can increase every billing cycle at the provider’s sole discretion.
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1. The Three Legal Plan Categories Under PUCT §25.475
| PUCT Plan Classification | How the Rate Changes | Contract Term & ETF | Who Should (or Shouldn’t) Use It |
|---|---|---|---|
| Fixed-Rate Product | REP energy charge is locked for the full term; only regulated TDU delivery or ERCOT statutory pass-throughs can adjust. | 3 to 36 months; $150–$295 ETF or $20/mo remaining (waived on move-out). | Recommended for 95%+ of Texas households seeking predictable summer and winter bills. |
| Variable-Rate Product | Changes monthly at the REP’s discretion based on internal pricing models. | Month-to-month (30 days); $0 cancellation fee. | Avoid except for short 2- to 4-week bridge periods before moving. Often reaches 19¢–24¢/kWh. |
| Indexed Product | Changes according to a publicly verifiable formula tied to an external index (such as natural gas or ERCOT wholesale settlement). | Month-to-month or fixed term. | Only for sophisticated users with automated load shedding; Note that direct residential wholesale pass-through was banned in 2021 by HB 16. |
2. The Default Renewal Holdover Trap (and the 14-Day Penalty-Free Window)
The #1 way Texas homeowners end up on a 21¢/kWh variable rate is not by choosing one—it happens automatically when a 12-month fixed contract expires without action. By law, your provider must send at least three contract expiration notices and allow you to switch to a new provider with $0 early termination fee during the final 14 days of your contract.
Frequently Asked Questions
Can a fixed-rate electricity plan increase its price during my contract in Texas?
The retail provider cannot raise its supply energy charge or base fee during a fixed-rate contract. However, your total per-kWh rate can shift slightly (usually 0.2¢ to 0.6¢/kWh) twice a year in March and September when the PUCT approves updated TDU delivery charges for Oncor, CenterPoint, AEP, or TNMP.
Are wholesale-indexed electricity plans like Griddy still legal in Texas?
No. Following Winter Storm Uri in February 2021, the Texas Legislature passed House Bill 16, which prohibited retail electric providers from offering residential or small commercial plans tied directly to real-time ERCOT wholesale market clearing prices.
Related Tools, Provider Profiles & Guides
- Compare Fixed-Rate Texas Electricity Plans
- 12-Month vs 24-Month Term Length Strategy
- Check If Your Bill Is on a Holdover Variable Rate
- View Nov 2026 Fixed Rate Benchmarks by TDU
All rate examples and TDU delivery tariffs verified November 4, 2026 from official PUCT filings and Electricity Facts Labels.