How to Differentiate Texas Electricity Plans

While you can't tell the difference between electricity plans in terms of what flows from your home's outlets, there can be significant factors separating one energy solution from another. Energy shoppers might come across different perks and offers involving green energy, smart technology and prepaid plans. These differences are factors in determining how much money you spend each month, and even how much flexibility you have in the future. Plus, Texas electricity plans come with their own rate attached.

Understanding a few common terms and knowing answers to energy-specific questions are keys to getting the rate and plan that fit your needs best. If you're new to energy choice or simply need a refresher course, take a few minutes to read through these definitions and questions.

With the right tools and resources at your disposal, it becomes easier than ever to compare Texas electricity plans and get the electricity solution you've always dreamed of – because as with all other comparison shopping, the right plan is about more than just the lowest rate.

Understand Common Electricity Plan Terms

Rate structure: This refers to how the rate you pay for electricity is determined. Typically, Texas electricity supply plans are organized around one of the following three rate structures: fixed rates, variable rates or indexed rates.

Fixed rates: Fixed-rate supply plans are stable and tend not to fluctuate with energy market lows and highs. With fixed rates, the price you pay per kilowatt hour of usage is secured for the duration of your agreement.

Variable rates: With a variable-rate supply plan, the price you pay for electricity will change periodically, based on overall market conditions. The electricity market in Texas is fluid. Prices can change from month to month.

Indexed rates: Considered by some as mature variable-rate supply products, indexed rates fluctuate depending on the market price of a specific commodity they're tied to. In many cases, indexed rates on electricity products are tied to another energy commodity, such as natural gas.

Billing options: Make sure your provider offers the type of payment method you prefer. This can extend to how you receive your bill as well. For example, many companies prefer to send paperless bills.

Level billing: Some retailers offer level, or average payment, billing as a different way to think about your energy costs. Rather than your bills varying from one month to the next based on your consumption, level billing means your energy bill will be the same amount every month for the length of your contract.

Learn About Common Electricity Plan Questions

Who chooses fixed rates? Fixed-rate supply plans are ideal for people who want to secure a rate and not have to think about it for a while. Also, it works well for consumers on a budget. Depending on the energy company you're thinking about working with, you may even be able to secure your rate for up to five years.

Who chooses variable rates? Variable supply rates offer the potential for savings as much as they offer the potential for peaking rates. Still, for some the possibility of cashing in on market lows is worth the risk of increasing rates. Many variable-rate supply plans also have brief contract periods.

Who chooses indexed rates? Consumers who want to take advantage of the benefits of having a flexible rate but want more of a safety net are typically those who sign up for this type of plan.

Who chooses level billing? Customers who choose a level billing option are most interested in predictability. To these consumers, there's something to be said for knowing exactly what your financial commitments are from one month to the next.

Updated: 8-8-16.