Electricity in Texas (2026): Choosing Your Provider Isn't Optional

Texas didn't just let homeowners choose their electricity provider — it removed the option of not choosing. In most of the state there is no utility standard rate to fall back on, which makes Texas the one deregulated market where the question "is switching worth it?" has a built-in answer: you're shopping either way, so you might as well be good at it. Here's how the market actually works in 2026, what power costs, and the specific plan designs built to overcharge people who stop paying attention.

The straight answer

Yes, you can choose — and in most of Texas you have to. About 85 percent of the state's electric load sits on the deregulated ERCOT grid, and in that territory there is no default utility service at all. Every household must pick a retail electricity provider the way you pick a phone carrier; nobody assigns you a sensible standard rate if you do nothing. A Provider of Last Resort exists in the rules, but it's an emergency backstop for when a provider goes under — not a plan anyone is meant to live on.

Does the forced shopping pay? On average, yes: households in deregulated-area Texas pay roughly 12 percent below the national residential rate in 2026. But that average hides the market's ugly half. The discount goes to people who compare plans at their real usage and re-shop at every contract end. People who set and forget quietly fund everyone else's savings through expired-contract holdover rates and gimmick plans — covered below, because they will find you.

How the market actually works

Deregulation split your electric service in two. The wires company that owns the poles and transformers in your neighborhood is still a regulated monopoly — it maintains the lines and restores outages no matter whose name is on your bill. The company you choose is a retail electricity provider that buys power wholesale and resells it to you under contract. Texas has roughly 50 to 70 active retail providers at any moment, and a typical ZIP code search returns 100 to 300 plans.

The official shopping site is Power to Choose, run by the Public Utility Commission of Texas. It's free, it lists certified providers, and it filters by contract length, rate type, and renewable content. It is also a marketplace providers have spent two decades learning to game — which is why the traps section below matters more than any filter.

One more Texas oddity: because there's no default service, there's no published "price to compare" benchmark like other deregulated states have. Your benchmark is your own current plan. Dig out a bill and find three things — the plan name, what you're paying per kWh at your usage, and the contract end date. That's the number every candidate plan has to beat.

Who can't choose: El Paso, Austin, San Antonio, and the co-ops

Retail choice stops at the edge of the ERCOT grid and at the city limits of the big municipal utilities. You have no provider choice if you live in:

• El Paso, the upper Panhandle, and parts of east and southeast Texas — these regions sit outside the deregulated market and remain on traditional regulated utilities.
• Austin or San Antonio — municipal utilities (Austin Energy and CPS Energy) are exempt from retail choice. Your city is your provider.
• Electric co-op territory — cooperatives across rural Texas are likewise exempt.

If that's you, the shopping advice here doesn't apply — your rate is set by your utility and its regulators. Your remaining leverage is the house itself: our electrical guide covers the panel-and-wiring side, and the HVAC guide covers the air conditioning that drives most Texas summer bills.

What electricity costs in Texas

Texas homes paid an average of 15.5¢ per kWh as of April 2025 (EIA Electric Power Monthly, Table 5.6.A). In deregulated territory, remember what that number is: a blend of people on sharp, recently shopped plans and people stranded on holdover rates. The chart below shows the full federal price history for Texas since 1990, with a dashed projection of where prices go if the last decade's pace simply continues — drag across it, or compare Texas against another state.

Two honest readings. First, Texas power is cheaper than the national average but no longer cheap — the residential rate has roughly doubled since 1990, and the climb steepened in the 2020s. Second, a rising rate raises the cost of inattention: at 15.5¢, the gap between a well-shopped plan and a lapsed month-to-month rate on an August air-conditioning bill is real money. Rising rates also strengthen the long-term math on rooftop solar — our solar panels guide runs those numbers — but in Texas the honest first step costs nothing: fix your plan before you finance panels.

The traps: bill credits, free nights, and the $9-per-kWh lesson

Here's what no billboard mentions: the "average price per kWh" a Texas plan advertises is only required to hold at exactly 500, 1,000, or 2,000 kWh of monthly usage — the three snapshot levels on every plan's standardized fact sheet. Providers engineer plans that look brilliant at those checkpoints and worse everywhere in between. A bill-credit plan pays out only above a usage threshold, so its 1,000-kWh advertised price looks great — land at 950 kWh in a mild month and the credit evaporates while the high underlying rate stays. "Free nights" plans give away the hours you barely use and load the cost into daytime rates, which is when your air conditioner actually runs.

Texas has the scar tissue to prove the stakes. During the February 2021 winter storm, customers of Griddy — a provider that passed raw wholesale prices straight through — received bills at roughly $9 per kWh, about sixty times today's average rate, while the grid failed around them. The legislature answered in 2021 with Senate Bill 3, which banned wholesale-indexed plans for residential customers. That product is dead. What replaced it as the market's main way of extracting money from inattentive customers is quieter:

The shopping checklist

Twenty minutes at every contract end. In order:

1. Find your real usage. Pull 12 months of bills or your online usage history and note your kWh in the peak summer month and the lowest winter month. Texas usage swings hard with the AC, and your usage — not the advertised tier — decides your bill.
2. Shop only at powertochoose.org. That's the PUC of Texas site. Plenty of commercial lookalikes rank plans by who pays them.
3. Ignore headline prices; compute yours. Open each plan's fact sheet and work out the total monthly cost at your actual summer and winter usage. If a plan's appeal depends on a bill credit or a free-nights window, assume it was engineered against you and price it carefully.
4. Prefer boring plans. A plain fixed-rate contract with no credits, no time windows, and no gimmicks is the only kind you can compare honestly at a glance.
5. Verify the provider and the exit fee. Retail providers must be certified by the Public Utility Commission of Texas, and the cancellation fee is printed on the fact sheet. Know both before you sign.
6. Never sign at the door or on a cold call. A legitimate deal will still be on the official site tonight. Pressure to sign right now is itself the warning.
7. Calendar the contract end date. Set two reminders — 30 days out and the week of. This one habit is worth more than any plan-picking cleverness.

Sources

• Power to Choose — the PUC of Texas's official plan-comparison site; plan counts and fact-sheet pricing tiers.
• Public Utility Commission of Texas — retail provider certification, market rules, and the post-2021 Senate Bill 3 reforms.
• U.S. Energy Information Administration — Texas average residential rate (15.5¢/kWh, Electric Power Monthly Table 5.6.A, April 2025) and the 1990–2025 historical price series in the chart (2025 preliminary).