Texas Electricity Usage Pricing: Why Cost Changes by kWh Level
Estimated costs are informational. Provider rates and plan terms may change. Confirm current details directly with the provider.
The deregulated Texas market
Texas has a deregulated electricity market, which means you can choose your retail electricity provider (REP). Providers compete on pricing structures, not only a single per-kWh number.
Why 500, 1,000, and 2,000 kWh benchmarks can mislead
Texas plans are commonly advertised at benchmark usage points. If your home usually lands between those points, your estimated monthly cost can differ from the displayed benchmark.
This is especially important when a plan includes base fees, usage credits, or minimum usage rules that activate only at specific thresholds.
Fixed charges matter
Most electricity plans include fixed monthly charges that don't change with usage:
- Base charge: The provider's monthly service fee (often $5-10)
- TDSP charge: Your utility company's delivery fee (set by regulators, not the provider)
Because these fixed charges are spread over your usage, your average price per kWh drops as you use more electricity.
Worked example: the same plan at 500, 1,000, and 2,000 kWh
| Usage | Energy | Base | Oncor delivery | Credit / fee | Total | Effective rate |
|---|---|---|---|---|---|---|
| 500 kWh | $60.00 | $9.95 | $34.21 | — | $104.16 | 20.8¢/kWh |
| 1,000 kWh | $120.00 | $9.95 | $64.36 | — | $194.31 | 19.4¢/kWh |
| 2,000 kWh | $240.00 | $9.95 | $124.65 | — | $374.60 | 18.7¢/kWh |
The energy charge never changes — every kWh costs 12¢ — yet the effective rate falls as usage rises, because the fixed base charge and the fixed portion of delivery are spread over more kWh. Add a bill credit or a minimum-usage fee to this structure and the curve stops being smooth entirely.
What about the "average price" in ads?
Electricity providers in Texas are required to publish average prices at 500, 1,000, and 2,000 kWh on their Electricity Facts Label (EFL). These show how the average price changes with usage.
If your typical usage is 750 kWh or 1,500 kWh, your result may differ from headline benchmark numbers. Comparison should be run at your expected monthly usage pattern.
TDSP charges: The delivery fee you can't escape
Your TDSP (Transmission and Distribution Service Provider) charges are set by the Public Utility Commission of Texas and passed through by your retail provider without markup. These charges include:
- A fixed monthly charge (around $4-6)
- A per-kWh delivery charge (around 4-6¢ per kWh)
Your TDSP depends on your location. The major TDSPs in Texas are:
- Oncor (Dallas/Fort Worth area)
- CenterPoint (Houston area)
- AEP Texas (Corpus Christi, West Texas)
- TNMP (scattered areas)
Comparison checklist before enrollment
Before selecting a plan, compare estimated total bill at your expected usage and nearby seasonal levels (for example: 800, 1,000, and 1,200 kWh).
- Check bill-credit and minimum-usage thresholds
- Confirm current TDU delivery charges for your service area
- Review EFL terms and provider enrollment details
Plan rates and terms may change. Confirm final details directly with the provider at enrollment.
Continue Comparing Smarter
Compare plans by estimated cost at your usage, then verify final pricing terms directly with the provider before enrolling.