Surprised by your electricity bill?

While deregulated energy has many benefits, it can also be confusing — and many Texans share the frustration of an unexpectedly high energy bill. Multiple factors could be responsible for a spike in your energy bill, such as seasonality, faulty appliances, and increased usage. Choose Texas Power can help you understand bill components, factors impacting your costs, and strategies to lower your bill.

Texas electricity bill charges explained

Many consumers forget to consider delivery fees and taxes when budgeting for their electricity bills. These charges may lead to higher costs than anticipated. Here is an explanation of all the charges on your Texas energy bill:

• Electric supply charge: The largest charge is based on your energy consumption. This is calculated by multiplying your electricity rate by the kilowatt-hours (kWh) you used for that billing cycle. Your provider may also charge a base fee for service.
• Market charges: These charges occur when the energy market shifts, helping to keep the power grid reliable and meet electricity demand.
• Utility delivery charge: Your utility company charges a fee for delivering electricity to your home. This may appear as a Transmission and Distribution Utility (TDU) or a Transmission and Distribution Service Provider (TDSP) charge. This typically includes a base charge and rate per kWh consumed.
• Taxes: Your bill includes city and state charges. There may also be a Miscellaneous Gross Receipts Tax (MGRT), which goes to the utility company. Lastly, the Public Utility Commission of Texas (PUCT) charges a tax on a Public Utility Commission Assessment (PUCA).

Which factors are driving up your electricity bill costs?

There may be several reasons why your electricity bill is changing. From macro conditions in the energy market to small changes in your home, here are a few likely culprits for increased energy costs.

Rate structure

If you have a variable-rate plan, you may experience a sudden spike in your electricity rate during extreme weather. Since this type of plan is tied to the energy market, your electricity rate fluctuates with the market cost of energy. Variable-rate plans can be great for flexibility but lead to high costs when demand peaks.

Seasonal variations

Weather changes in Texas have a major impact on energy costs. Summer and winter tend to cause high electricity consumption as Texans rely heavily on AC and heating. When your electricity usage increases, so does your total bill. For customers who need a new provider or plan, these seasons are a less ideal time to shop for a new energy contract because market prices spike.

Inclement weather

Texas is known for unpredictable storms, such as hurricanes, cold snaps, and heat waves. If a storm damages electrical equipment in your area, such as poles and wires, the cost to fix it might show up on your electricity bill over time. Utility companies are responsible for fixing local infrastructure and often pass this cost to consumers through additional monthly fees.

Inefficient appliances and lighting

Inefficient appliances and lighting could be driving up your electricity bill. Heating and cooling account for over 30% of residential electricity usage. If your HVAC system is old or faulty, it might be wasting electricity. Schedule routine maintenance to ensure this appliance is at peak performance.

Lighting is one of the next highest consumers in your house, accounting for over 10% of residential electricity usage. Consider switching to LED lighting to save up to 75% more electricity than incandescent bulbs.

Holidays and events

Extra guests during holidays or family events can increase your household energy consumption and lead to a higher energy bill. Those additional showers, loads of laundry, and cooking may seem small, but they add up. This additional usage may be the culprit if your bill increased and you had more residents than usual.

Bill credits

While bill credits can be advantageous, they can also lead to unexpectedly high energy costs if you don’t sign up for a plan that aligns with your usage patterns. Bill credit plans have a usage threshold consumers must meet to qualify for the discount. For example, a plan may state that if you use 1000 kWh of electricity, you’ll receive a $100 credit on your bill. The catch is that you don’t get the discount if you don’t meet that limit, which could lead to a surprisingly high bill.

The key takeaway for bill credit plans is that the rate structure must match your typical energy usage. Carefully review your past energy bills to learn if your energy habits match what your desired bill credit plan requires. Otherwise, your plan may become more pricey than other options.

Strategies to lower your energy bill

The good news is there are plenty of ways to decrease surprises on your electricity bill. Follow these steps to ensure you aren’t paying more for your electricity than you should be.

1. Switch to a fixed-rate plan. Fixed-rate plans offer the most stability for consumers and shield you from high rates in the summer or winter months.
2. Decrease your energy consumption. Start by turning off the lights, unplugging unused electronics, and lowering your HVAC and water heater. While these habits seem small, they can go a long way in lowering your monthly usage.
3. Invest in energy-efficient appliances. Inefficient appliances are likely costing you a lot of money. While investing in new appliances is expensive, it can lead to significant long-term savings. For example, an ENERGY STAR-certified washing machine uses 25% less energy than other models. Over time, those savings can significantly affect your electricity bill.
4. Know your energy consumption. Electricity plans are typically divided into 500, 1000, and 2000 kWh usage tiers. Some plans have better rates for a specific tier than others. If you know which usage tier you typically fall into, you can shop accordingly and pick a plan that offers the lowest rate for your usage level. Read each plan’s Electricity Facts Label (EFL) to determine whether it fits well.

Electricity bill cost FAQs

Can I avoid delivery fees?

No, everyone in Texas’ deregulated market must pay delivery fees to their local utility company.  These charges ensure electricity is transported and delivered safely across the power grid to homes and businesses. The (PUCT) regulates delivery fees to ensure fair pricing.

How can I tell what is draining my electricity?

Consider which appliances you use the most. For many households, this would be your HVAC unit, laundry machines, water heater, or dishwasher. Once you determine which appliance you run the most, try to decrease how often you use it.

What would cause a sudden spike in my electricity bill?

If you have a variable-rate plan, then it is likely because the energy market is experiencing increased demand. Otherwise, if your bill suddenly goes up, you may be using a certain appliance more, such as air conditioning in summer or heat in winter.

Is switching energy plans worth it?

In some scenarios, yes. If you browse plans on our marketplace and notice that electricity rates for your location are cheaper than what you are currently paying, it might be worth switching. Also, if your current plan has a higher renewal rate, switching could be your best bet. Call our team for guidance — we can help determine if you are paying too much for your plan and find a cheaper option.