Fixed or variable

Fixed vs variable electric rate: which is better in Texas?

If you plan to stay in your home for a while, a fixed rate gives you a steadier price. A fixed price can change only for a few outside charges, but a variable price can change with every bill.

Published 2 November 2026

Can a fixed price go up?

Only for a short list of outside reasons. Texas rule 16 TAC §25.475 says a fixed price may change “solely” for these reasons.

Delivery charges. Your local utility, or TDU, owns the poles and wires and charges your provider to use them.

Grid fees. These come from ERCOT, which runs most of the Texas grid, and from the group that checks its reliability.

New laws. A new federal, state or local law can add or change a fee your provider cannot control.

A hot summer, a freeze or high market prices are not on that list. So a fixed price cannot rise just because the weather or the market changed.

The Public Utility Commission of Texas can let one more grid charge through, but only by order. And a provider may not call a plan “fixed” unless it meets this test.

How do you spot an allowed change? Your bill must show it on its own line, or say that it may include such changes.

When your utility raises its delivery rates, your bill can go up, even on a fixed plan. Here is when delivery charges change.

How does a variable rate work?

With a variable rate, your provider sets the price by its own method. It can change from month to month.

For a home, Texas rules allow a variable plan only as a month-to-month contract. That means no cancellation fee, so you can leave any time.

Its label shows only the price for your first bill, and it must say later prices can change. Some variable plans cap how much the price can rise each month, and their label must say by how much.

The provider must also share the current price and up to a year of past prices. You can find them on its website or by calling its toll-free number, and the label says where.

If your fixed contract ends and you do nothing, you move to a month-to-month plan like this. Here is what to do before your end date.

Can a variable rate jump in a heat wave or freeze?

Yes, it can. Unless your plan has a monthly cap, this Texas rule sets no limit on how far the price can rise.

Your provider does not have to warn you ahead of time, either. A change to your contract that costs you needs 14 days' written notice, but a variable price change does not.

What you do get is a note on every bill. It must tell you how to find the price for your next bill.

If the price jumps, you can switch with no fee. But a switch can take up to 7 business days, so check your price before a hot or cold spell.

When does a variable rate make sense?

A variable plan has one big strength: you can leave any time with no fee. That can help in a few cases.

A short stay. You need power for a few weeks or months, and you do not want a contract.

A gap between plans. Your contract has ended, and you are still choosing the next one.

A move coming up. You know you will leave soon, but you do not have a date yet.

A fixed plan also ends with no fee when you move, if you give a forwarding address. Here is how that works.

Neither kind is always cheaper, so compare the estimated cost of both on your own usage. For a longer stay, a fixed rate keeps your plan's prices steady for the whole term.

1. Match the plan to your stay

   Staying a year or more? A fixed term fits. Leaving soon? Month-to-month does.

2. Know your end date

   When a fixed contract ends, you move to a price that can change each month.

3. Compare on your own usage

   A plan that looks cheap at 1,000 kWh may not fit your year.

Articles are general information for Texas electricity shoppers. Every cost Power Rate Check shows is an estimate, and the Electricity Facts Label is the provider's official price document — read it before you sign.