Shopping for cheap electricity in Texas is pretty simple when using an easy to compare site like Shop Texas Electricity, but you have to understand exactly what kind of plan you need to get the most out of it. There are two main plans: fixed and variable. Both plans get you the same electricity, but you will pay different amounts and your terms and conditions may be different depending on which you choose.
Fixed rate plans are the best when you can find one at a low rate. These plans lock in your residential electricity rates for the duration of your contract length, which can be anywhere between three months and three years, depending on your provider and plan. Even if the energy market changes and prices go up, you will continue to pay the same amount for your electricity. The only way your price can change is if the transmission and distribution utility change their fees or the Electricity Reliability Council of Texas changes their fees or implements new policies which could impact costs on the REP or TDU end. These types of plans usually have an early termination fee if you back out of your contract before it ends.
Variable rate plans work just the way they sound: they vary. Every month, your electricity rate, the cost per kilowatt hour of electricity used, will go up or down depending on how the market is changing. These plans are best if you only need electricity for a very short time, as they are often a little under the cost of a fixed rate plan, but due to market conditions, their prices could climb much higher than if you locked in a fixed rate price. Variable rate plans don’t have a contract length, so you can cancel any time.