Why the Advertised kWh Price Is Not the Whole Story
Every retail electricity provider (REP) operating in the Texas deregulated market is required by the Public Utility Commission of Texas (PUCT) to publish an Electricity Facts Label (EFL). That label lists a price per kWh, typically at three usage benchmarks: 500 kWh, 1,000 kWh, and 2,000 kWh per month.
The critical detail most shoppers miss: those three numbers are averages, not the rate you pay on each marginal kilowatt-hour. The average is computed by dividing total estimated monthly charges (energy charge plus all fixed fees) by the usage benchmark. When your actual usage falls between benchmarks, or outside them entirely, your effective cost per kWh shifts. It can shift substantially.
A plan that shows 11.2 cents per kWh at 1,000 kWh and 9.8 cents at 2,000 kWh contains a fixed monthly charge that is being spread across more kilowatt-hours as usage rises. If you use 750 kWh in a mild month, neither published figure applies. You have to calculate your own average.
The formula is straightforward:
Effective cost per kWh = Total monthly bill / Total kWh consumed
If your bill is $118.40 and your meter recorded 880 kWh, your effective rate is 13.45 cents per kWh. That is the only number worth comparing across providers.
What Goes Into the Electricity Price Per kWh in Texas
Texas electricity bills are built from several distinct cost layers. Understanding each layer explains why two plans with identical advertised rates can produce different actual bills.
Energy charge. This is the variable component, billed per kWh consumed. It reflects the wholesale cost of power plus the REP’s margin. On a standard fixed-rate plan, this number is locked for the contract term. On an indexed or variable plan, it can change monthly.
Base monthly charge. Most plans carry a flat fee, commonly between $5 and $9.95 per month, regardless of usage. This fee is included in the EFL averages but is not labeled separately on many shopping comparison tools. A $9.95 base charge spread across 500 kWh adds 1.99 cents per kWh. Spread across 1,500 kWh, it adds only 0.66 cents. The same plan looks cheaper to high-volume users purely because of arithmetic.
TDU delivery charges. Transmission and Distribution Utility (TDU) fees are set by the local wires company, not the REP. In the Oncor service territory (Dallas-Fort Worth area), the residential delivery charge in 2024 is approximately $3.42 per month plus 3.8249 cents per kWh. In CenterPoint territory (Houston area), the structure differs. These fees are pass-through costs that appear on every Texas electricity bill regardless of which REP you choose. They are included in EFL averages, which means switching REPs does not eliminate them.
Minimum usage fees and bill credits. Some plans include a monthly bill credit, for example $50 off your bill, but only if your usage exceeds a threshold such as 1,000 kWh. This structure artificially improves the 1,000 kWh and 2,000 kWh EFL figures without benefiting customers whose usage falls below the threshold. Reading the terms and conditions, not just the EFL, is the only way to catch this structure.
Renewable energy premiums. Plans with a 100 percent renewable designation sometimes, not always, carry a modest premium over comparable non-renewable plans. LightCompanies tracks this premium by comparing plans from the same provider at the same usage tier. In recent quarters, the premium has ranged from near zero (where RECs are cheap) to about 0.5 cents per kWh. That is material over a full year of usage.
Current Cost Per kWh Benchmarks in Texas
PUCT publishes a Power to Choose database that aggregates EFL data from licensed REPs. LightCompanies pulls this data quarterly. The figures below reflect the most recent snapshot available (Q1 2025). Rates change frequently, and shoppers should verify current pricing before signing any contract.
At 1,000 kWh per month usage, the effective fixed-rate average across all Oncor-territory plans in the database is approximately 12.8 cents per kWh (including TDU charges). The range across plans runs from roughly 10.1 cents on the low end to over 16 cents on plans with higher base charges or premium add-ons.
For context, the U.S. Energy Information Administration reported the Texas residential average at 13.2 cents per kWh in 2023, which sits above the simple Power to Choose average because it captures variable-rate customers, customers on holdover rates after contract expiration, and customers on prepaid plans, all of which tend to carry higher effective rates.
CenterPoint-territory rates at the same usage tier run slightly lower on the energy component but carry different TDU charges, making direct comparison between the two territories less meaningful without adjusting for the TDU structure.
How to Calculate Your Personal Cost Per kWh
The most accurate comparison uses your own usage history, not a generic benchmark.
Step 1: Pull 12 months of usage data. Your current provider’s online portal or the SmartMeterTexas.com database (operated by ERCOT) provides monthly kWh readings tied to your meter. Download the annual history.
Step 2: Identify your usage range. Note your lowest month (typically a mild spring or fall month) and your highest month (typically July or August in most Texas markets). A household averaging 1,200 kWh annually might range from 600 kWh in April to 2,100 kWh in August. That range matters because a plan with a 1,000 kWh bill credit will perform very differently in those two months.
Step 3: Apply the plan’s fee structure to each month. Take the energy rate from the EFL terms and conditions (the per-kWh charge, not the published average), add the base monthly charge, add the TDU delivery charges for your territory, and apply any conditional credits. Sum those monthly totals over 12 months. Divide by your total annual kWh.
That produces your projected effective annual cost per kWh for a specific plan at your actual usage pattern. Running this calculation for two or three competing plans takes about 30 minutes and produces more actionable data than any comparison tool that only shows EFL averages.
Step 4: Apply the same method to your current bill. Total dollars paid over the past 12 months divided by total kWh consumed gives you the baseline you are trying to beat.
Where kWh Price Comparisons Break Down
Several plan structures make per-kWh comparison unreliable without adjustment.
Free nights and weekends plans. Some providers offer a plan where off-peak hours (typically 9 PM to 6 AM or weekends) are billed at zero cents per kWh. The on-peak rate is higher than a standard plan. Whether this structure lowers your effective cost per kWh depends entirely on your load shape. A household with a time-shifted electric vehicle charging overnight and minimal daytime AC use can come out well ahead. A household running AC around the clock during a Texas summer will not.
Prepaid electricity. Prepaid plans in Texas do not carry term commitments and do not require a credit check. They also do not publish EFL averages in the same standardized format. Effective rates on prepaid plans tend to run 1 to 3 cents per kWh higher than comparable term plans, based on PUCT complaint data and plan disclosures reviewed by LightCompanies. The premium reflects the credit risk and administrative cost the provider absorbs.
Variable-rate plans. These plans have no fixed energy component. The rate resets monthly based on the provider’s pricing decision, which is loosely tied to wholesale market conditions. Variable rates in Texas ran well above fixed-rate alternatives in summer 2022 and again during winter peak periods. The absence of a locked rate makes per-kWh comparison a snapshot rather than a forecast.
Indexed plans tied to ERCOT real-time pricing. A small number of providers offer residential plans directly indexed to day-ahead or real-time ERCOT prices. These plans are appropriate only for customers with smart thermostats, demand response capability, or a high tolerance for price volatility. During Winter Storm Uri in February 2021, real-time ERCOT prices hit the $9.00 per kWh regulatory cap for extended periods. That event remains a relevant data point for evaluating indexed-plan risk.
What a Competitive Rate Looks Like in Practice
LightCompanies uses 1,000 kWh per month in Oncor territory as a reference scenario because it sits near the Texas residential median. At that benchmark, a plan pricing below 11.5 cents per kWh (effective, including TDU charges) ranks in the lower third of the current market and warrants closer review. A plan above 13.5 cents at the same benchmark requires a specific justification, such as premium renewable sourcing, no-deposit terms, or contract flexibility, to be competitive.
For comparison, large incumbent providers (Reliant and TXU Energy) typically price their standard fixed-rate plans at 12.5 to 14 cents per kWh at 1,000 kWh in the same territory. Smaller REPs and newer market entrants frequently undercut that range by 1 to 2 cents but carry thinner customer service infrastructure, which is reflected in PUCT complaint ratios.
PUCT only publishes complaint data in quarterly snapshots. The most recent data available covers through Q3 2024. Complaint ratios (complaints per 10,000 customers) vary from under 5 for some established providers to over 40 for providers with billing system problems. Rate competitiveness and service reliability are not the same metric, and LightCompanies scores both separately.
The Takeaway on Texas Electricity Pricing
The electricity price per kWh in Texas is a derived figure, not a posted price. It depends on your usage level, your usage pattern, your service territory’s TDU structure, and the specific fee architecture of the plan you choose. Two plans showing 11.8 cents per kWh on a comparison site can produce bills that differ by $15 to $25 per month for the same household.
The calculation required to find the actual cost per kWh is not complicated. It requires the EFL terms and conditions (not just the summary table), 12 months of your own usage history from SmartMeterTexas.com, and basic arithmetic. That 30-minute investment produces a comparison that is specific to your household rather than to a statistical average customer.
Plans with conditional bill credits, minimum usage thresholds, or free-period structures require additional scrutiny. The EFL averages published for those plans can be misleading for customers whose usage does not hit the threshold or whose load shape does not match the assumed pattern.
For shoppers evaluating providers beyond just the rate, LightCompanies profiles individual REPs using complaint data, billing reliability records, and plan flexibility alongside pricing. Rate is a necessary input but not a sufficient one.