January 28, 2023
Did you know that energy deregulation has made it possible for Texans to choose their own energy plan and energy providers? It's true. No longer are Texans stuck with having to choose from just one local monopoly energy provider. You have the power to choose the best plan with the lowest rates for your home.…

Did you know that energy deregulation has made it possible for Texans to choose their own energy plan and energy providers? It’s true. No longer are Texans stuck with having to choose from just one local monopoly energy provider. You have the power to choose the best plan with the lowest rates for your home.

There are several types of energy plans to choose from and we are here to explain some of them. The most common types are the fixed-rate plan, the variable-rate plan, and the time-of-use plan.

Each type of plan has its own benefits that appeal to different types of people depending on their lifestyles, energy usage patterns, and consumer needs. One commonality between all these plans is that they all offer a guarantee of not being charged any cancellation fees if the customer ends his or her contract before the end date stated in the agreement. This makes it easy to switch back and forth between providers, but is there really a reason to do that?

Energy Deregulation in Texas

Before anything else, it’s important to know the basics about energy deregulation. Energy deregulation has allowed Texans to have more options when choosing an energy provider. Before this took place, everyone had to get their electricity from just one company in their area which was the only type of company allowed to sell electricity at the time.

Now, customers can compare electricity providers and shop for an energy plan that works best for them. Energy deregulation has made it possible for a customer to have a choice among several competing companies which offer different types of plans and services with each one trying to distinguish itself from the others. 

The State of Texas passed legislation in 2002 that was meant to deregulate the retail energy market and open it up to the competition. Before this, customers were forced to just accept whatever their local utility company had to offer them. Now they can choose from many different types of plans and providers and compare rates before making a final decision on an energy plan.

3 Common Plans: Fixed-Rate, Variable-Rate, and Time-of-Use

Fixed-Rate Plan

One of the most basic and popular types of energy plans is the fixed-rate plan. Under this type of plan, a customer’s rate per kWh will remain unchanged throughout the contract period. This means that no matter how much electricity you use or when you use it, your energy bill will stay exactly the same as long as you maintain your agreement.

Variable-Rate Plan

Another popular energy plan is the variable-rate plan which may change depending on how much electricity you use. Sometimes the rate per kWh may increase, decrease, or stay the same throughout your contract period. If you’ve ever received an electricity bill that had a high amount for last month’s usage, then you may have gotten lucky with this type of plan. However, taken to the extreme, it’s possible for your energy provider to go bankrupt during an extremely cold winter in Texas and leave you without your home heating services.

Time-of-Use Plan

The third type is called the time-of-use (TOU) plan which will allow you to reduce your electricity usage during peak times. Peak hours are usually considered to be from 11 AM to 6 PM in the afternoon when everyone is home and using up most of their electricity, so this plan will give you the ability to manage how much energy you use during these times.

It is possible for customers who sign up for a time-of-use plan to receive energy credits if they are able to reduce their usage during peak hours. If you are thinking about getting this type of plan, make sure that you keep track of your electricity usage pattern over the course of an entire week so you can see which times tend to be busier for you.