On the hottest days of summer, when every air conditioner in Texas runs full blast and the ERCOT grid approaches its limit, your electric company might ask you to use less power for a few hours. In exchange, they’ll pay you.
That’s demand response in a nutshell. It’s a growing part of how Texas manages its electricity grid, and it puts money in your pocket for something that’s usually just a minor inconvenience.
What Is Demand Response?
Building a power plant that only runs 100 hours per year is wildly expensive. Demand response (DR) flips the script: instead of adding generation, the grid operator pays consumers to temporarily use less during periods of high stress.
How It Works for Homeowners
- You enroll in a demand response program through your electric company or a third-party aggregator
- When the grid is under stress (most often a hot summer afternoon, though events can be called any time of year), you receive a notification
- You reduce your electricity usage for a set period (up to 4 hours in the big Texas programs)
- You receive compensation: bill credits, lower rates, or direct payments
The most common residential DR programs work through smart thermostats. You give the program permission to raise your thermostat setting by up to 4 degrees during peak events. In exchange, you get paid.
Who Runs These Programs?
Demand response in Texas operates at multiple levels:
ERCOT: The grid operator coordinates large-scale demand response through programs like Emergency Response Service (ERS), plus the 4 Coincident Peak (4CP) transmission-charge mechanism that large commercial and industrial customers respond to.
Electric companies: TXU Energy and Reliant Energy offer residential DR programs, usually tied to smart thermostat enrollment.
Third-party aggregators: Companies that pool thousands of homes into virtual power plants. In Texas this path is thin. OhmConnect, the best-known independent household aggregator, has stopped taking Texas enrollments, and trade coverage reported its Texas customers moving to Direct Energy in 2026. Its successor, Renew Home, runs its Texas thermostat program through NRG’s brands (including Reliant) rather than signing up households directly. ERCOT’s aggregated distributed energy resource (ADER) pilot lets aggregators bid household devices into the wholesale market, but ERCOT reported six aggregations participating, with 64.7 MW of energy capability, as of October 2025, and said the primary technology is batteries.
Types of Residential Demand Response
Three program types exist for Texas homeowners, each with different trade-offs between effort and payout.
Smart Thermostat Programs
The most common residential program. You connect your smart thermostat to the program, and during peak events the thermostat automatically nudges your temperature up a few degrees. Compatible models differ by company: Reliant lists Vivint, Google Nest, Sensi and Honeywell (or another manufacturer it approves), and TXU lists Resideo, Amazon and Sensi (as of September 2026). Ecobee is on neither list.
What you feel: Your house gets slightly warmer on the days when the grid is tightest. Reliant says events can be called any time during the year, will last no longer than four hours, and will move your thermostat by no more than four degrees. TXU describes it more loosely: “adjusted by a few degrees for a short time.” Most people barely notice.
What you get: TXU’s Connected Conservation program advertises up to $150 in rewards, redeemable as $50 in gift cards, a $50 prepaid card, or $150 toward energy-saving home products. Reliant’s Degrees of Difference page says you “earn a bill credit” if you take part in at least half of the total event hours, and at least one event, in a program year that runs November 1 to October 31—but it doesn’t publish what that credit is worth. Reliant has run $50 enrollment credits in the past; the offer page carrying that figure is dated to an August 31, 2024 deadline, so don’t count on it until you see it in writing.
You can opt out: Most programs let you override individual events. If it’s your kid’s birthday party and you need the AC blasting, you can skip that event. Skip more than half of the event hours in a program year and you forfeit Reliant’s credit.
Peak Time Rebates
Instead of automated thermostat control, some programs simply pay you a higher rate for every kWh you don’t use during peak events compared to your baseline.
How it works: Your electric company establishes a baseline for your typical usage. Reliant says it reviews your usage over the last five weekdays before an event and averages the kWh you used during the same hours. During a peak event, any kWh you use below that baseline earns you a rebate.
Example: Your baseline is 5 kWh per hour during peak. During an event, you use 3 kWh per hour. You get paid for the 2 kWh reduction at a premium rate. Reliant’s manual-thermostat version of Degrees of Difference pays a $0.60 bill credit for every kWh you save.
The advantage: No device control. You decide how to reduce—raise the thermostat, turn off the pool pump, postpone laundry. It’s entirely in your hands.
Behavioral Programs
The simplest version: your electric company sends you a notification asking you to conserve, tracks whether you did, and rewards you with small credits or prizes.
No device enrollment. No automated control. Just an email or text saying “the grid needs help, please reduce usage this afternoon” and a bill credit if you measurably reduced consumption. In Texas the manual Degrees of Difference program is the working example, at $0.60 per kWh saved.
These programs pay the least but require the least commitment.
What Demand Response Pays
Less than you’d hope, and harder to pin down than it should be. TXU is the only one of the two largest programs that publishes a number. Reliant tells you the rules for earning its credit but not what the credit is worth. Here’s what each one actually says.
Typical Residential Earnings
| Program | What the company publishes (as of September 2026) | Commitment Level |
|---|---|---|
| TXU Connected Conservation (smart thermostat) | Up to $150 in rewards: $50 in gift cards, a $50 prepaid card, or $150 toward energy-saving home products | Low (automated) |
| Reliant Degrees of Difference (smart thermostat) | A bill credit each program year if you take part in at least half the event hours; amount not published | Low (automated) |
| Reliant Degrees of Difference (manual thermostat) | $0.60 bill credit per kWh saved during each event | Medium (manual reduction) |
Bigger payouts would depend on ERCOT’s proposed Residential Demand Response Program (NPRR 1296), which would pay electric companies for verified household reductions at times of high net load, under a 500 MW seasonal cost cap. ERCOT’s protocol subcommittee tabled it in September 2025 and referred it to two working groups; it was still pending when this was written.
What It Works Out To
For most Texas homeowners enrolled in a smart thermostat DR program:
- Events of up to 4 hours, called on the tightest grid days (sometimes more than once a day)
- Thermostat raised by up to 4°F during events
- Compensation: at TXU, up to $150 in rewards; at Reliant, a bill credit the company doesn’t put a number on
Not life-changing, and at Reliant you’re agreeing to it without knowing the price. But it’s free money for a barely noticeable temperature difference on days when it’s 107°F outside and your house was going to be warm regardless.
How to Enroll
Most Texans can sign up for demand response in under 15 minutes. You have three paths.
Through Your Electric Company
Check your electric company’s website or call customer service to ask about demand response programs. TXU Energy and Reliant Energy both offer smart thermostat enrollment programs. Ask what the credit is worth before you connect the thermostat, and get the answer in writing.
Requirements:
- Smart thermostat on your company’s compatibility list (see above; Ecobee is on neither)
- Wi-Fi connection
- Central air conditioning
- An account in good standing with that company
Some companies offer a free or discounted smart thermostat as an enrollment incentive. Check if the thermostat deal is better than buying one separately—sometimes it is, sometimes the bundled rate premium wipes out the savings. See our guide on bundled electricity plans for the math on evaluating these deals.
Through a Third-Party Aggregator
This path has mostly closed for Texas households. OhmConnect has stopped taking Texas enrollments, and trade coverage reported its Texas customers moving to Direct Energy in 2026. Virtual Peaker and EnergyHub sell software to utilities and don’t enroll households directly.
The main aggregator activity today runs through your electric company: Renew Home (the successor to Google Nest Renew and OhmConnect) partners with NRG to install no-cost Nest and Vivint thermostats for customers who pick eligible Reliant-family rate plans.
If an independent program does appear, check both sets of terms before stacking it with your electric company’s program.
ERCOT’s 4CP Program (Commercial)
This one is for commercial and industrial customers, but it explains a lot of the grid’s summer behavior.
ERCOT determines the four highest-demand 15-minute intervals each summer (one per month, June through September). Large consumers who reduce usage during these peaks save significantly on their transmission charges for the following year.
Residential customers don’t participate directly.
The Grid Perspective: Why This Matters
One household’s credit is a rounding error. But hundreds of thousands of thermostats adjusting simultaneously? That’s a virtual power plant. ERCOT told its Wholesale Market Subcommittee in November 2025 that fewer than 4% of residential customers in competitive areas take part in demand response, about 252,000 out of 7 million.
The Peak Problem
Texas electricity demand peaks on hot summer afternoons when every AC unit runs at full capacity. The grid must have enough generation to meet that peak demand—but building power plants that only run 100 hours per year is incredibly expensive.
In the same presentation, ERCOT put residential demand at roughly 30,000 MW on high-demand winter and summer days, 35% or more of overall load, so even a small percentage cut is a large power plant’s worth. During near-emergency conditions, ERCOT can deploy Emergency Response Service to avoid curtailing power to anyone.
Growing Importance
As Texas adds more solar power, the grid faces a new challenge: solar production drops off in the evening just as people come home and crank up the AC. This creates a steep ramp in net demand in the early evening after sunset that’s difficult for other generators to fill.
Demand response during these evening ramp hours will become increasingly important—and likely increasingly valuable for participants.
Is Demand Response Worth It?
The short answer: if you already own a smart thermostat, yes. The effort rounds to zero. If you don’t own one, it depends on whether you planned to buy one anyway.
The Case For Signing Up
It’s mostly automated: Smart thermostat programs require zero ongoing attention. You enroll once, and the thermostat handles everything.
The comfort impact is small: An increase of up to 4°F during the hottest hours of the hottest days is barely noticeable, especially with ceiling fans running. Your house goes from 74°F to 77°F, not from 74°F to 85°F.
You can opt out: Having a bad day? Override the event. Reliant lets you override any event from your thermostat or its app; you keep the credit as long as you take part in at least half of the event hours.
Free money for not much: TXU’s rewards, or Reliant’s credit, for doing almost nothing.
Grid contribution: You’re helping prevent blackouts. That has real value for your community, even if the personal payment is modest.
The Case Against
Small and, at Reliant, unnamed payments: Rewards in the tens of dollars aren’t meaningful for many households, and Reliant asks you to sign up before it will tell you what its credit is worth. If the enrollment process or occasional opt-out hassle isn’t worth that, skip it.
Privacy concerns: Connecting your thermostat to a utility or third-party aggregator means sharing your home’s energy usage data and giving them limited control of your AC. If that’s a dealbreaker, the manual programs (a notification, no device control) are a lower-commitment alternative.
Not for everyone: If you have medical conditions requiring consistent temperatures, or if household members can’t tolerate heat, demand response isn’t appropriate.
The Bottom Line
Demand response programs in Texas are low-risk, low-reward. You give up a few degrees of comfort on the tightest grid days, and you get a modest reward: up to $150 at TXU, an unspecified bill credit at Reliant. The enrollment is easy, the events are automated, and you can opt out when you need to.
Is it worth it? For most homeowners with a smart thermostat, yes. The effort-to-reward ratio is high because there’s almost no effort. You sign up, connect your thermostat, and cash the credits.
If you don’t have a smart thermostat, the calculation changes. Buying one just to collect a sign-up reward in the tens of dollars won’t pay for itself quickly. But if you were already considering one for comfort and efficiency, the DR payments sweeten the deal.
To compare electricity plans that include demand response programs, check current offerings from TXU Energy and Reliant Energy in our TXU vs Reliant comparison. Ready to shop? Visit ComparePower to see plans in your area.
Frequently Asked Questions
What is demand response in Texas electricity?
Demand response is a system where homeowners voluntarily reduce electricity usage during peak grid stress in exchange for payment. Most residential programs work through smart thermostats that automatically raise your temperature by up to 4 degrees during peak events, most often on hot summer afternoons. You receive bill credits or direct payments for participating.
How much do demand response programs pay in Texas?
Less than the marketing suggests, and one of the two largest programs won’t say. TXU’s Connected Conservation advertises up to $150 in rewards: $50 in gift cards, a $50 prepaid card, or $150 toward energy-saving home products. Reliant’s Degrees of Difference promises a bill credit each program year if you take part in at least half the event hours, but doesn’t publish the amount. Reliant’s manual version pays $0.60 per kWh you cut during an event.
Can I opt out of demand response events?
Yes. Most programs allow you to override individual events through your thermostat or the program’s app. Reliant requires participation in at least half of the event hours, and at least one event, in a program year to earn its credit, but there’s no other penalty. Programs are voluntary and can be canceled at any time.
Do I need a smart thermostat for demand response?
For automated programs, yes—you need a compatible smart thermostat. Reliant lists Vivint, Google Nest, Sensi and Honeywell; TXU lists Resideo, Amazon and Sensi. Manual programs that email you and measure your response afterward don’t require any special equipment. Some companies offer free or discounted thermostats as enrollment incentives.