Understanding Your Choices for Rates in Electricity

As a resident of the state of Texas, things have certainly changed for you when it comes to the electricity you need to power your home. The old method of providing electricity was simple. One electric company provided the service for a certain area of the state. You did not get a choice in your electric company and you had very little choice in how you paid for that electricity, what you paid, and how it all worked for your home. However, the state of Texas has recently passed deregulation laws. This means you have the right to choose from different electric companies no matter where you live in the state.

When you choose a different electric company, you do not have to deal with big changes. Instead, the same wiring will come to your home and provide power. The only thing that will change would be rates in electricity and how you pay your bill. Because you have never had the option before, you could feel a little lost. How do you know what you should choose? What types of rates in electricity would work best for your home and your budget? To get you started on the right track, here is some information on the basic rates that different comparable electric companies would charge.

Fixed Rates

One option you could choose would be fixed rate electricity plans. These rates make it easy for you to create a budget since you will know exactly what you will pay each month. A fixed rate is calculated for the year and you pay a specific amount for your monthly electric bill. The only downside is if electric rates drop during that year, you will still be paying the same fixed rate.

Variable Rates

The next option for rates in electricity would be variable. This is a common option since it lets you take advantage of rate drops when they come along. Essentially, your electric rate will be determined each month and this can save you money. However, you will not have a set amount to pay each month and some months could cost more than others.

Indexed Rates

This is a common rate plan for natural gas as well as electricity. With these rates, a formula is created and you will be charged per kWh based on those published rates. These plans often offer lower rates than variable or fixed options, but they will vary from month to month.


The final option for rates in electricity would be prepaid or pay-as-you-go. With this option, you pay for your electricity a month in advance. This is a good option for those who may have poor credit since it does not require a credit check or a deposit.

As you can see, you have options for your electric rates, and with deregulation you actually get to choose the option that would work best for you.

ShopTXElectricity helps you quickly and easily compare electricity rates.

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