You know that advertised rate you saw—“Just 8.9 cents per kWh!”? That’s not what you’ll pay.
The real price is buried in a document that most people never read: the Electricity Facts Label, or EFL. It’s like a nutrition label for electricity plans, except instead of revealing hidden sugars, it reveals hidden fees, tiered rates, and usage credits designed to inflate your bills.
The state regulator (PUCT) requires every electric company to publish an EFL for every plan it sells. It’s the standardized price disclosure document in the Texas electricity market. Learn to read it, and you’ll never get tricked by marketing again.
What Is the Electricity Facts Label?
The EFL is a standardized two-page document required by state rule (16 TAC §25.475). It must include:
- Average prices at three usage levels: 500, 1,000, and 2,000 kWh per month
- All fees and charges: Base charges, minimum usage fees, TDU delivery charges
- Contract details: Length, early termination fees, renewal terms
- Renewable energy percentage: How much of the plan comes from green sources
- Company contact information: Phone number, website, PUCT certification number
Every electric company must give you the EFL before you enroll. If it doesn’t, that’s a red flag.
The Three Usage Tiers (And Why They Matter)
Here’s the first thing you’ll see on an EFL:
Average price per kWh:
- 500 kWh: 16.2 cents
- 1,000 kWh: 13.5 cents
- 2,000 kWh: 12.3 cents
(Illustrative numbers. Competitive 12-month fixed plans ran about 12 to 15 cents per kWh in September 2026.)
These aren’t price ranges—they’re the average rates you’ll pay at each exact usage level, including all fees and delivery charges.
Why Three Numbers?
The three tiers represent typical residential usage:
- 500 kWh: Small apartments and condos
- 1,000 kWh: Average single-family homes
- 2,000 kWh: Larger homes with high AC usage
PUCT set those levels to make plan comparison easier. But here’s the trick: companies design rates to look good at one tier while gouging customers at others.
Example: How Tiered Rates Manipulate You
Let’s say you use 600 kWh per month. A plan shows:
- 500 kWh: 19.3 cents
- 1,000 kWh: 14.4 cents
- 2,000 kWh: 15.5 cents
That 14.4-cent tier is the number in the ad. You’re not using 1,000 kWh, though, and the reason the middle tier dips is that the plan pays a bill credit once you reach 1,000 kWh. At 600 kWh you never get the credit, so your real rate lands up near the 500 kWh number, around 18.8 cents per kWh once the base charge and delivery fees are in.
The rule: Trust the tier closest to your actual usage, and read the fine print that explains why the tiers differ. If you typically use 800 kWh per month, the 1,000 kWh rate is your best reference point, and it will still flatter any plan that hangs a credit on 1,000 kWh.
How to Calculate Your Real Rate
The advertised rate is almost always lower than what you’ll pay. Here’s the formula behind those EFL averages:
Real Rate = [(kWh × Energy Charge) + Base Fee + TDU Fees] ÷ kWh
Let’s break down a real-world example.
Example Plan Breakdown
Advertised rate: 10.0 cents per kWh Energy charge: 7.5 cents per kWh (the actual electricity) Base charge: $9.95 per month (flat fee just for having service) TDU delivery charges: 6.0 cents per kWh plus $4.06 a month (Oncor, September 2026)
If you use 1,000 kWh:
- Energy: 1,000 kWh × $0.075 = $75.00
- Base charge: $9.95
- TDU delivery: (1,000 kWh × $0.06) + $4.06 = $64.06
- Total bill: $149.01
- Real rate: $149.01 ÷ 1,000 kWh = 14.9 cents per kWh
That’s 49% higher than the advertised rate. And this is a straightforward plan—wait until we get to bill credits and minimum usage fees.
Section-by-Section EFL Breakdown
1. Average Price per Kilowatt-Hour
This is at the top of every EFL. It shows the average price you’ll pay at 500, 1,000, and 2,000 kWh after all fees are included.
What to watch for:
- Wide gaps between tiers (sign of tiered pricing that penalizes certain usage levels)
- The 500 kWh rate being significantly higher (you’ll pay a lot if you use less than expected)
2. Electricity Price
This section shows the base energy charge before delivery fees. Some plans have a flat per-kWh rate. Others have tiered pricing or time-of-use rates (cheaper at night, more expensive during peak hours).
Red flag: Plans with “bill credits” bundled into this section. Example: “15 cents per kWh minus a $75 bill credit at 1,000 kWh usage.” The credit lands only if you reach the threshold. Go over it and you keep the credit; fall 10 kWh short and you lose the whole thing.
3. Base Charge
A flat monthly fee that doesn’t change based on usage. Common amounts: $4.95 to $14.95 per month.
Why it matters: If you’re a low-usage customer, base charges crush your effective rate. A $9.95 base charge adds 2 cents per kWh to a 500 kWh bill, but only 0.5 cents per kWh to a 2,000 kWh bill.
Some companies like Rhythm Energy don’t charge base fees, which helps apartment dwellers and light users.
4. TDU Delivery Charges
These are the fees charged by your local Transmission and Distribution Utility (Oncor, CenterPoint, AEP Texas, or TNMP) for maintaining the power lines. They’re the same no matter which company you buy from. Learn more in our guide on understanding TDU charges.
Typical TDU charges:
- Monthly customer charge: about $3.24 to $7.85 (as of September 2026; Lubbock’s LP&L has none)
- Per-kWh delivery charge: about 5 to 7.4 cents per kWh (as of September 2026)
TDU charges are non-negotiable and come to roughly 40 to 50% of a 1,000 kWh bill. On Oncor, the $4.06 monthly charge plus 6.0295 cents per kWh works out to about $64 at 1,000 kWh (September 2026), against a total bill of $120 to $150 on a competitive plan. They’re unavoidable, but understanding them helps you compare each company’s actual energy charge.
5. Minimum Usage or Bill Credit Details
This is where companies hide the tricks.
Minimum usage fees: If you don’t use at least X kWh per month, you get charged extra. Common threshold: 1,000 kWh. If you use 900 kWh, you might pay a $9.95 penalty, pushing your effective rate through the roof. See our best companies for low usage if you typically use less than 1,000 kWh.
Bill credits: “Use 1,000 kWh and get $50 off your bill!” Sounds great. But the energy rate underneath is inflated to pay for it. The credit applies at or above the threshold, so 1,020 kWh keeps the $50 while 980 kWh loses all of it and leaves you paying the inflated rate with no discount.
EXAMPLE: In the worked example below, falling 100 kWh short of a 1,000 kWh bill-credit threshold pushes the real rate to 14.8 cents against a 9.0-cent advertised rate, 64% higher.
6. Contract Term and Cancellation Fee
Most plans lock you in for 6, 12, 24, or 36 months. Cancel early and you’ll owe an early termination fee (ETF): $150 on most 12-month plans, about $295 on 24-month, and up to $395 on 36-month plans at the largest companies.
What to check:
- ETF amount (a few companies, such as Rhythm, charge $20 per remaining month instead of a flat fee)
- What happens at the end of the term (you roll onto a month-to-month product whose price can change every billing cycle)
- Move-out clauses (state rules require every company to waive the ETF when you move, as long as you give a forwarding address and, if asked, proof of the move)
If your contract is ending soon, check out our guide on when to switch electric companies to avoid getting rolled onto a bad rate.
7. Renewable Energy Content
Texas requires every company to disclose the percentage of renewable energy in each plan. The statewide average printed on EFLs is about 35% as of early 2026 (35.2% on labels issued in January 2026), mostly wind and solar.
If a plan is 100% renewable, it’ll say so here. Some companies like Gexa Energy specialize in green plans, while others sell renewable options at a premium.
Why Advertised Rates Are Misleading
Here’s the truth: the all-in price you actually pay can run 40 to 65% above the rate in the ad (see the worked examples below).
How Companies Game the System
1. Optimized for 2,000 kWh
Ads show whichever tier looks best, and on many plans that’s the 2,000 kWh rate. But the average Texas household uses about 1,100 kWh per month (1,096 kWh in 2024, per the EIA). You’re not getting the rate they’re advertising.
2. Base Charges Hidden in Fine Print
A $9.95 base charge isn’t sexy, so it’s buried in the EFL. But it adds a full cent per kWh to a 1,000 kWh bill—enough to turn a “9-cent plan” into a 10-cent plan before delivery charges.
3. Bill Credits You Have to Earn Every Month
“Use 1,000 kWh and save $50!” Use 1,050 kWh and you keep it. Use 950 kWh and you get nothing. These plans lure you in with a great rate that only applies if you clear the line every single month.
4. Excluding TDU Charges from Ads
Companies love to advertise the energy charge alone: “Just 8 cents per kWh!” But TDU delivery charges add another 5 to 7 cents per kWh plus a monthly charge (as of September 2026). Your real rate is closer to 13 to 15 cents.
EXAMPLE: A company advertises “9.0 cents per kWh for 12 months.” The EFL shows:
- Energy charge: 7.2 cents per kWh
- Base charge: $9.95
- TDU delivery: 6.0 cents per kWh plus $4.06 a month
- Bill credit: $20 if you use 1,000 kWh or more
If you use 1,000 kWh:
- Energy: $72
- Base: $9.95
- TDU: $60 + $4.06 = $64.06
- Bill credit: -$20
- Total: $126.01 = 12.6 cents per kWh (not 9.0 cents)
If you use 900 kWh:
- Energy: $64.80
- Base: $9.95
- TDU: $54 + $4.06 = $58.06
- Bill credit: $0 (didn’t reach 1,000 kWh)
- Total: $132.81 = 14.8 cents per kWh (64% higher than advertised)
This is legal. This is common. This is why you need to read the EFL.
Red Flags to Watch For
1. Huge Rate Gaps Between Tiers
If the 500 kWh rate is 19 cents and the 2,000 kWh rate is 12 cents, the plan is built to punish low-usage customers. Avoid it unless you consistently use 1,500 kWh or more per month.
2. Base Charges of $10 or More
Some companies charge $10 to $15 a month in base fees. For low-usage customers, that alone can add 2 to 3 cents per kWh. Always factor base charges into your comparison.
3. Bill Credits with a Usage Threshold
“$50 credit when you use 1,000 kWh” is all or nothing. Clear the threshold and you keep the credit; fall a few kWh short and you get none of it. Your usage moves month to month, so plan on missing it sometimes.
4. Minimum Usage Fees
“If you use less than 1,000 kWh, you’ll be charged the difference.” This means if you use 800 kWh, you’ll be billed as if you used 1,000 kWh. Avoid these plans if you live in an apartment or don’t use AC year-round.
5. High Early Termination Fees
A high ETF is a warning sign, and the number climbs with the term. The biggest companies, including TXU Energy and Reliant Energy, charge $150 on 12-month plans and about $295 on 24-month plans, and TXU goes up to $395 on 36 months (as of September 2026). If a smaller company wants more than that on a 12-month plan, it’s betting you’ll get stuck.
How to Use the EFL to Compare Plans
Here’s your step-by-step process:
Step 1: Find your average monthly usage
Check your past 12 months of electricity bills. Calculate your average kWh per month. This is your baseline for comparison.
Step 2: Download EFLs for 3-5 plans
Every company is legally required to make EFLs available on its website. If you can’t find it easily, that’s a bad sign.
Step 3: Compare the rate closest to your usage
If you use 850 kWh per month, compare the 1,000 kWh tier across all plans. Ignore the 2,000 kWh rates—they don’t apply to you.
Step 4: Check for base charges and bill credits
Add the base charge to your monthly bill estimate. If there’s a bill credit, check if you’ll realistically hit the threshold every month. If not, ignore the credit.
Step 5: Calculate your total estimated bill
Use the formula: Monthly bill = (kWh × Energy Charge) + Base Fee + (kWh × TDU per-kWh Charge) + TDU monthly charge
Do this for all plans. The lowest total bill wins, not the lowest advertised rate.
Step 6: Verify contract terms
Check the ETF, the contract length, and what the default month-to-month product costs when the term ends. A slightly higher rate with no ETF might beat a low rate with a $295 cancellation fee.
Need help comparing? Use ComparePower.com to see plans side by side with your actual usage factored in.
Real-World EFL Comparison
Let’s compare two plans for a customer who uses 1,000 kWh per month.
Plan A: “Low Advertised Rate”
- Advertised rate: 9.5 cents per kWh (the ad assumes you hit the credit every month)
- Energy charge: 8.4 cents per kWh
- Base charge: $12.95
- TDU charges: 6.0 cents per kWh plus $4.06 a month
- Bill credit: $30 if you use 1,000 kWh or more
If you use 1,000 kWh:
- Energy: $84
- Base: $12.95
- TDU: $60 + $4.06 = $64.06
- Credit: -$30
- Total: $131.01 = 13.1 cents per kWh
If you use 900 kWh:
- Energy: $75.60
- Base: $12.95
- TDU: $54 + $4.06 = $58.06
- Credit: $0
- Total: $146.61 = 16.3 cents per kWh
Plan B: “Straightforward Rate”
- Advertised rate: 10.5 cents per kWh
- Energy charge: 8.0 cents per kWh
- Base charge: $4.95
- TDU charges: 6.0 cents per kWh plus $4.06 a month
- No bill credits or minimum fees
If you use 1,000 kWh:
- Energy: $80
- Base: $4.95
- TDU: $64.06
- Total: $149.01 = 14.9 cents per kWh
If you use 900 kWh:
- Energy: $72
- Base: $4.95
- TDU: $58.06
- Total: $135.01 = 15.0 cents per kWh
Verdict: Plan A wins at 1,000 kWh, by $18 a month. Miss the threshold by 100 kWh and it loses to Plan B by $11.60, because the inflated energy rate is still there after the credit disappears. Plan B moves a tenth of a cent between the two months. If your usage sits comfortably above the threshold every month, take the credit. If it wanders, take the boring plan. This is why understanding fixed vs variable rate plans matters when comparing options.
The Bottom Line
The Electricity Facts Label is the only document that shows you what you’ll pay. Ignore marketing. Ignore advertised rates. Read the EFL.
Here’s your checklist:
- Compare the usage tier closest to your average monthly consumption
- Add up all fees: base charges, TDU delivery, and minimum usage penalties
- Be skeptical of bill credits unless your usage clears the threshold every single month
- Calculate your total estimated bill, not just the per-kWh rate
- Check contract terms and early termination fees
Still confused? That’s the point. The Texas electricity market has been deregulated since 2002, and companies have spent two decades perfecting the art of confusing pricing. But now you know how to decode the one document they can’t hide: the EFL.
Want to compare plans without doing the math yourself? ComparePower.com factors in your actual usage and shows you the real cost of every plan.
For more on understanding your electricity costs, check out our guide on how to read your Texas electricity bill or learn about TDU delivery charges.
Frequently Asked Questions
What is an Electricity Facts Label (EFL)?
The EFL is a standardized two-page document required by Texas law that shows the true cost of an electricity plan. It includes average prices at 500, 1,000, and 2,000 kWh usage levels, all fees, contract terms, early termination fees, and renewable energy content. Every company must give you the EFL before you enroll.
Where can I find the EFL for an electricity plan?
Every Texas electric company must make EFLs available on its website, usually linked near each plan’s details. If you can’t find it easily, that’s a red flag. You can also ask the company for it directly before signing up. Never enroll in a plan without reading the EFL first.
Why is the advertised rate different from what I pay?
Advertised rates often exclude TDU delivery charges, base fees, and are shown at usage levels you may not reach. A plan advertising “10 cents per kWh” might show 10 cents at 2,000 kWh but cost 14 cents at 1,000 kWh. The EFL shows the all-in average price at different usage levels—that’s the number to trust.
What should I look for on an EFL before signing up?
Focus on the average price at your typical usage level (500, 1,000, or 2,000 kWh). Check for base charges, minimum usage fees, and bill credits that only pay out once you reach a usage threshold. Review the contract length and early termination fee. Plans with dramatic rate differences between usage tiers often penalize customers who don’t use “enough” electricity.