What Happens When Your Electricity Contract Expires (Avoid the Rate Trap)

Your electricity contract is about to expire. You’ve probably gotten a notice in the mail or an email. Maybe you’ve ignored it.

Don’t.

When your contract expires, you don’t lose power. Instead, you start paying a “holdover rate” — and it’s almost always significantly higher than what you’re paying now. Let me show you exactly what happens and how to avoid getting stuck with a rate that could cost you hundreds extra per year.

What Actually Happens on Expiration Day

Here’s the sequence of events when your fixed-rate electricity contract expires:

Day of expiration: Your contract ends at midnight. The lights stay on. Nothing changes physically about your service.

Next billing cycle: You’re automatically moved to your provider’s default month-to-month plan at what’s called a “holdover rate,” “out-of-contract rate,” or “variable rate.”

Your bill: Goes up. Sometimes a little. Often a lot.

You don’t sign anything. You don’t agree to anything. You just start paying more because you didn’t take action.

This is legal and disclosed in your original contract. But it catches thousands of Texas electricity customers off guard every month.

The Holdover Rate Trap

Let’s talk numbers. [DATA: Month-to-month rates after contract expiration average 40% higher] than in-contract rates, according to industry data. Some customers see increases of [DATA: 50%+] when they let their contracts lapse.

Here’s a real example: You’re currently paying 11 cents per kWh on a fixed contract. Your contract expires. Your provider’s default holdover rate is 16 cents per kWh.

At 1,000 kWh per month:

• Before: $110/month
• After: $160/month
• Annual difference: $600

That’s $600 you’re paying simply because you didn’t shop for a new plan before your old one ended.

Why Holdover Rates Are So High

Holdover rates reflect current wholesale market conditions. When you’re on a fixed contract, your provider has hedged against price fluctuations. When you’re month-to-month, they’re passing wholesale costs (plus a premium) directly to you.

Also: providers don’t want you on holdover rates long-term. The high price is partly designed to motivate you to sign a new contract—either with them or someone else.

The Three Notices You’ll Receive

Texas law requires your electricity provider to send you contract expiration notices. Here’s what to expect:

Notice #1: 30-60 Days Before Expiration

This is your first heads-up. The Public Utility Commission of Texas requires providers to send this notice at least 30 days, but no more than 60 days before your contract ends.

The notice includes:

• Your contract end date
• Renewal offers from your current provider
• A reminder that you’ll be moved to a variable rate if you do nothing

What to do: This is your signal to start shopping. Don’t wait.

Notice #2: Mid-Term Reminder

Some providers send a second notice around the 15-20 day mark. Not all do.

Notice #3: Final Notice (14 Days Before)

This last notice is critical. It includes the Electricity Facts Label (EFL) for the default month-to-month plan you’ll be moved to if you don’t take action.

The EFL shows:

• The holdover rate structure
• All fees
• Terms and conditions

What to do: If you’re seeing this and haven’t shopped yet, you need to move fast. You still have time to avoid the rate increase.

What the Notice Looks Like

The notice should be clearly labeled as a “Contract Expiration Notice” on the envelope or in the email subject line. It’s designed to be obvious—though many customers still overlook it in the mail pile or spam folder.

If you’re not sure whether you’ve received a notice, log into your account or call your provider directly.

How to Check Your Contract End Date Right Now

Don’t wait for a notice. Find out when your contract ends today.

TXU Energy

• Log into MyAccount or use the TXU Energy app
• Check your monthly energy bills—the end date is printed on each one
• Call 800-242-9113 if you need help

Reliant Energy

• Log into your online account
• Go to “Plan” to see your expiration date
• Call 1-866-222-7100 for assistance

All Other Providers

Your contract end date appears on every monthly bill, usually in the plan information section. You can also:

• Log into your provider’s online portal
• Check your original contract documents
• Call customer service

Action item: Right now, before you finish reading this, add your contract end date to your calendar with a reminder 45 days before. This is the single most important thing you can do to avoid the holdover rate trap.

The 14-Day ETF-Free Switching Window

Here’s a rule that protects you: You can switch to a new provider without paying an Early Termination Fee (ETF) during the final 14 days of your contract.

This means:

• If your contract ends April 30, you can switch penalty-free starting April 16
• You can sign up with a new provider and schedule the switch for your end date
• No fees, no penalties, seamless transition

The strategy: Shop for plans 30-45 days before your contract ends. Lock in a good rate. Schedule your switch for your ETF-free window. By the time your old contract expires, you’re already enrolled in a new one at a competitive rate.

If you miss this window and your contract expires, you’re automatically on the holdover rate. The good news: month-to-month plans have no contract, so you can switch immediately without penalty once you’re on one.

Auto-Renewal: The Other Trap

Some contracts include an automatic renewal clause. Instead of moving you to a month-to-month rate, your provider automatically enrolls you in a new fixed-rate contract.

Sounds convenient, right? Here’s the problem:

The auto-renewal rate is almost never the best available rate. It’s usually competitive enough that you might not notice immediately, but worse than what you’d get by shopping around.

How to Check If You Have Auto-Renewal

Look at your original contract or Terms of Service. Search for “auto-renewal,” “automatic renewal,” or “renewal terms.”

Many major providers like TXU and Reliant don’t auto-renew—they move you to variable rates instead. See our TXU vs Reliant comparison to understand the differences. But some smaller providers do.

How to Opt Out

If your contract has auto-renewal:

• You typically have 14-30 days after the renewal to cancel without penalty
• Check your renewal notice for specific cancellation instructions
• Contact your provider directly to opt out before the renewal date

Best practice: Don’t rely on remembering to opt out. Set a calendar reminder 30 days before expiration to shop for new plans, whether or not you have auto-renewal.

When to Start Shopping (The 30-45 Day Rule)

The optimal time to shop for a new electricity plan is 30-45 days before your contract expires.

Here’s why this window works:

45 Days Out: Too Early

• Rates change daily—what’s available now might not be available at your switch date
• You’re outside your ETF-free window
• Most providers can’t schedule service starts that far in advance

30-45 Days Out: Just Right

• Rates are relatively stable over this timeframe
• You have time to research and compare without rushing
• You can schedule your switch for your ETF-free 14-day window
• If your preferred plan disappears, you still have time to find alternatives

14 Days Out: Cutting It Close

• You’re in your ETF-free window (good)
• But you’re rushing to compare providers and plans (bad)
• If something goes wrong with enrollment, you might end up on the holdover rate

After Expiration: Damage Control Mode

• You’re already paying the holdover rate
• Switch immediately—month-to-month plans have no contract, so no penalty
• Don’t wait another month; every day on holdover costs you money

What If You Miss the Deadline?

Let’s say your contract expired last week and you’re already on the holdover rate. Here’s what to do:

1. Shop immediately: Use ComparePower.com to compare current rates
2. Sign up today: Most providers can switch you within 1-2 billing cycles
3. No penalty: Month-to-month plans have no early termination fees
4. Don’t wait: Every month you delay costs you extra

Yes, you’ll pay the holdover rate for one more billing cycle while your switch processes. But that’s better than paying it for months because you kept putting off the decision.

Provider-Specific Rollover Policies

Different providers handle contract expiration differently. Here’s what to expect from major Texas electricity companies:

TXU Energy

• Moves customers to variable month-to-month rate at expiration
• Sends renewal offers via mail and email at required intervals
• Online renewal available through MyAccount
• No auto-renewal on standard residential contracts

Reliant Energy

• Default to variable rate at contract end
• Three notices as required by Texas law
• Renewal plans shown in online account as expiration approaches
• Customer must actively accept renewal—no automatic enrollment

Direct Energy

• Variable month-to-month rate applies after contract ends
• Standard notice timeline (30-60 days, then final notice)
• Renewal offers sent via mail

Key takeaway: Most major providers in Texas use the variable/holdover rate model rather than auto-renewal. This means if you do nothing, you pay more. But it also means you’re not locked into anything and can switch anytime once your contract expires. Read our guide on reading the Electricity Facts Label to compare renewal offers accurately.

How Much Will Your Rate Actually Increase?

The honest answer: it depends on current market conditions when your contract expires.

Conservative estimate: Expect [DATA: 20-30% higher] than your in-contract rate for most of the year.

Worst-case scenario: If your contract expires during peak summer demand (July-August), holdover rates can be [DATA: 50%+ higher] than in-contract rates.

Example from recent data: In 2025, a Dallas customer who shopped in April found rates around [DATA: 10 cents per kWh], while summer holdover rates reached [DATA: 16+ cents], representing a [DATA: 60% increase].

Your specific increase depends on:

• When your contract expires (summer vs. winter)
• Current wholesale electricity prices in Texas
• Your provider’s specific holdover rate structure
• Your TDU (transmission and distribution utility)

The “Renewal Offer” Question

Your provider will send you renewal offers along with the expiration notices. Should you accept them?

Short answer: Maybe, but shop around first.

Renewal offers are usually competitive enough to keep you from immediately leaving. But they’re rarely the best available rate.

Here’s what to do:

1. Note the renewal rate your provider offers
2. Shop ComparePower.com to see what else is available
3. Compare total costs, not just the advertised rate per kWh
4. Factor in any loyalty credits, usage credits, or other perks

If your provider’s renewal offer is within 0.5-1 cent per kWh of the best alternative and you’ve been happy with their service, staying might be worth the convenience. But if better rates exist—and they usually do—it’s worth switching.

Month-to-Month vs. New Fixed Contract

Once your contract expires, you have two paths:

Stay on Month-to-Month

Pros:

• No contract, switch anytime without penalty
• Useful if you’re planning to move soon
• Lets you wait and watch for rate drops

Cons:

• [DATA: 40%+ higher] rates on average
• Rates can change monthly—unpredictable bills
• Costs you money every month you wait

Best for: People moving in 1-3 months, or those actively watching the market to time a better fixed-rate contract.

Lock in a New Fixed-Rate Plan

Pros:

• Lower rates than month-to-month (usually 4-8 cents less per kWh)
• Predictable bills
• Protection against market price spikes

Cons:

• Contract commitment (6-36 months typical)
• Early termination fee if you leave early
• Need to shop again when this one expires

Best for: Most people. The savings almost always outweigh the commitment, especially if you’re not planning to move soon.

If you’re not planning to move in the next few months, lock in a fixed rate. The savings are real and immediate.

Your Action Plan

Here’s exactly what to do, step by step:

If Your Contract Hasn’t Expired Yet

1. Find your contract end date (check your bill or online account)
2. Set three calendar reminders:
   • 45 days before: “Start shopping for electricity”
   • 30 days before: “Finalize new plan”
   • 14 days before: “ETF-free window opens—schedule switch”
3. At 30-45 days out: Compare plans on ComparePower.com
4. Sign up for your chosen plan, schedule your switch date for your ETF-free window
5. Confirm your old service will end and new service will begin on your contract expiration date

If Your Contract Expired in the Last 30 Days

1. Compare plans today on ComparePower.com
2. Sign up immediately—no penalty since you’re month-to-month
3. Schedule the earliest switch date available
4. Accept that you’ll pay the holdover rate for one more billing cycle while the switch processes

If Your Contract Expired Months Ago

You’ve been overpaying for a while. That stings, but don’t let it continue.

1. Switch today (seriously, stop reading and go compare plans)
2. Calculate how much extra you’ve paid so you remember this lesson next time
3. Set calendar reminders for your new contract so this doesn’t happen again

Questions You Might Have

Q: Will I lose power when my contract expires? No. Your power stays on. You’re automatically moved to your provider’s month-to-month rate.

Q: Can I switch providers mid-contract? Yes, but you’ll pay an Early Termination Fee (usually $50-200). Only worth it if the savings outweigh the fee. Read our guide on when to switch electricity providers for the math.

Q: Do I have to switch to a different provider? No. You can renew with your current provider if they offer a competitive rate. But shop around—competitor rates are often better.

Q: What if I’m moving soon? If you’re moving in less than 3 months, staying on month-to-month might make sense despite the higher rate. Month-to-month plans have no early termination fees.

Q: Can I negotiate my holdover rate? Rarely. The holdover rate is typically set by the provider and isn’t negotiable. Your leverage is leaving for a better rate elsewhere.

Q: What happens if I switch providers and my current contract hasn’t expired? You’ll pay an Early Termination Fee. Wait until your ETF-free window (final 14 days) to avoid this.

The Bottom Line

When your electricity contract expires, you don’t lose power—but you do start overpaying. The holdover rate trap costs Texas customers millions annually.

The solution is simple: shop for a new plan 30-45 days before your contract expires, lock in a competitive fixed rate, and schedule your switch for your ETF-free window.

Set a reminder right now. Your future self—and your wallet—will thank you.

Ready to compare plans? Check current rates at ComparePower.com. And if you’re trying to decide between providers, start with our provider comparisons to see how they stack up.

For more on choosing the right plan type, see our guide on fixed vs. variable rate plans. And if you’re already shopping, check out the best month-to-month providers if you need flexibility, or our guide on how to switch electricity providers for the step-by-step process.