Understanding The Average Cost of Electricity in Texas for Businesses and Homeowners

Reducing the cost of power in Texas

Texas is a massive consumer of electricity. Each year, its residents use more electricity than any other state. No state even comes close to Texas. Roughly half of the energy used in Texas goes to the massive, expanding industrial sector. The Texas industrial sector alone uses nearly as much electricity as the entire state of Florida. What’s left is split between the residential sector, commercial, and transportation sectors.

How Much Does Electricity Cost Residential Customers?

Texas produces a significant excess of electricity and most of it remains on their private electrical grid known as the Texas Interconnection. This allows for various retail electricity providers to offer very competitive rates. The average price of electricity per kWh in Texas in April of 2021 was $0.1197. However, depending on the provider you choose and the details of your contract you can expect to pay anywhere between $0.08 and $0.18 as an electric rate.

This is considerably lower than many other states. Rhode Island, Massachusetts, Alaska, and Connecticut all had average rates above $0.20 for this same period. There are only a handful of states, including Washington and Missouri, that have lower average rates.

Despite this lower rate, the average monthly electric bill is one of the highest in the country. The national average electric bill in 2021 is close to $118. The average residential electric bill in Texas is considerably higher with an estimate closer to $137. Why is it that the average Texas electric bill is so much higher when the cost per kWh is much lower?

Texas Residents Use a Lot of Energy

The problem isn’t the cost of energy, but rather the amount of energy that the average Texas household uses despite aggressive energy plans offered by Texas electricity providers like TXU energy and Gexa energy (their Gexa saver plan for instance). During that same period in April, the average Texas household consumed 1,140 kWh of electricity. That number fluctuates to some degree each year and rises significantly during certain months when the need is higher to beat the heat. Average energy consumption for any given month may vary between 1,100 kWh and 1,400 kWh.

Even with a lower average cost, these large usage numbers result in very high monthly electric bills. Alaska, by comparison, had an average energy cost of $0.2215 during the month of April. Their average monthly usage was only 555 kWh, which resulted in a bill closer to $122. Rhode Island is another state with a higher cost, but lower monthly bill thanks to decreased power usage.

Weather Makes a Big Difference

The local climate is one of the biggest factors that influence energy consumption. Most of the states with consumption levels similar to Texas are hot, southern states like Florida, Georgia, and Mississippi. The summer months in all of these states can reach into the high 90s and low triple digits. This results in energy-hungry air conditioners running consistently for much of the year.  Given that Texas has had more occurrence of volatility in their power grid, such as a power outage, this can also vary energy rates and put a strain on the utility company.  However, as mentioned the rates in Texas are generally lower from other initiatives such as heavy investment in green energy, and other endeavors by the utility commission of Texas, for instance.

Texas has a unique system for buying and sell electricity from different providers. This open market system causes the price of electricity to fluctuate with the supply and demand. Thus, as more electricity is used during the summer, the supply decreases, and the demand increases. The shift results in electricity prices increasing and the monthly energy bill climbing even higher.

These Change Impact Commercial Clients and Business Electric Rates Too

Commercial clients aren’t immune to these huge demands and fluctuations in prices. As a matter of fact, they feel the impact more significantly than their residential counterparts. Most commercial buildings are much larger than the average home. They have more people, more machinery, and greater direct energy demands. All of this results in a much higher monthly bill for business owners when you look at a month usage cycle. On the bright side, businesses are often able to secure better long-term contracts from providers, which results in lower energy costs per kWh.

The average cost of Texas electricity for a business is close to $0.008. The national average is much higher at a rate closer to $0.10 per kWh. Unfortunately, much like residential clients, businesses in Texas tend to consume far more energy than the national average. The average American business uses around 6,000 kWh while the average Texas business uses more than 8,000 kWh per month. Very large businesses in big buildings can use closer to 27,000 kWh each month.

This puts the average monthly energy bill in Texas for businesses above $668.  For business electric rates, any company in Texas is going to need to find the cheapest electricity and keep their usage levels at a reasonable level.

The good news is that just because the monthly average of electric bills in Texas is so high doesn’t mean your monthly residential or commercial bill needs to be that high. The average figure takes into account variable prices that can be much lower or much higher than the average. There are steps you can take to save money and stay beneath the average.

Shop Smart for Your Energy

One major influence on your monthly bill is going to be the retail electricity provider (REP) you choose to use. There are more than 150 REPs in Texas and there are some significant differences between many of them. Some of them offer plans or contracts that are specifically tailored towards businesses and others boast extremely low residential rates.

Having so many choices for an electric plan is simultaneously a benefit and a burden. You have plenty of opportunities to save money and secure great long-term contractors. At the same time, many homeowners rush into deals with REPs basing their decision on a quick glance at their current pricing per kWh.

You can easily find yourself locked into an unfavorable contractor and energy plans with rates that increase dramatically after an introduction period. There are also plenty of providers who offer low rates but make their money back through a variety of hidden fees and taxes, so while they may seem to have the cheapest electricity on Texas electricity rates, you need to be aware of all of the fine print. They may have limitations on how much electricity they provide each month along with other confusing obligations that are hidden in their Terms of Service.

Efficient research is the key to staying below the monthly average. You need to investigate each potential REP carefully and review the terms of their contract. You can use our website to locate a REP in your area and review all of the important details from a single site. Our goal is to help residential and commercial clients identify the best electricity providers in their area as quickly and efficiently as possible.

Some other plans and providers you should be aware of when searching for rate plans:

– Power Plus
– Express Energy
– Chariot Energy
– Smartricity Premier
– Value Plus
– AEP North
– AEP Central
– MAXX Saver Select

– Power to Choose
– Cirro Energy
– Green Mountain
– Texas Saver and Texas Fixed
– Champion Energy
– TXU Energy
– Gexa Saver

Be Mindful of Your Energy Usage

Remember, the actual cost per kWh in Texas is generally lower than most other states. It’s the high consumption in homes and businesses that causes monthly prices to skyrocket. Luckily, consumption is a variable that you can control at home. You can easily lower your bill by being mindful of your electrical devices and the energy that they consume and getting on a good electric plan, and by comparing electricity rates.  There you can find options like prepaid electricity or prepaid plans, fixed-rate or variable plans, and choose energy plans that based on your average electricity rate will equal the best savings.

For example, don’t make the assumption that a device isn’t consuming electricity if it isn’t turned on. A significant percentage of electricity is wasted on devices that are plugged in but not actually turned on. You can reduce your electricity consumption and save money by taking the time to unplug devices that you aren’t using which is smart value and best practice will help you to direct energy needs accordingly.

Every small change can make a difference. That also includes simple acts like turning off the lights when you leave the room or turning off the television when you’re eating dinner. Don’t leave your laptop charging after it’s fully charged and don’t forget to turn off the coffee pot when you leave for work. Finally, keep the AC unit in the 70s so that it doesn’t need to run constantly and waste electricity, even if it’s consuming just basic power.

Commercial And Residential Clients Can Both Save Money

Saving money isn’t just for residential clients. Commercial businesses can practice smart shopping and mindful electricity consumption as well. These tips are even more important during the summer months when electricity usage and price per kWh both increase. With the right REP, compare electricity plans in Texas and a few key changes, you can save hundreds of dollars every year on Texas electricity rates.