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You’ve seen the ads: 9.7¢ per kWh. It sounds like a steal. But most of those headline rates come from bill credit electricity plans, and the low price only shows up when your usage lands in a narrow window. Fall outside it and the same plan can cost you twice as much per kWh.
Key takeaways
- Many low advertised rates rely on a bill credit (for example, $100 off) that only applies within a set usage range.
- Miss the range by even a few kWh and you lose the credit, which can push your effective rate past 20¢.
- Texas usage swings a lot between seasons, so most households miss the window several months a year.
- The fix is to compare plans across your real 12-month usage, not one month at 1,000 kWh.
How bill credit electricity plans work
A bill credit plan pairs a fairly high energy charge with a flat credit that’s applied only when your monthly usage falls within a certain range, such as 1,000 to 2,000 kWh. At exactly the right usage, the credit drags the average price way down, and that’s the number that ends up in the ad.
The rules are spelled out on the plan’s Electricity Facts Label (EFL), but they’re easy to miss if you don’t know where to look.
The catch: what happens outside the window
Here’s a simplified example of how one plan might behave:
| Monthly usage | Bill credit applied? | Effective price per kWh |
|---|---|---|
| 900 kWh | No | about 21¢ |
| 1,000 kWh | Yes ($100) | about 9.7¢ |
| 1,500 kWh | Yes ($100) | about 13¢ |
| 2,100 kWh | Depends on the plan | can jump again |
Illustrative numbers only. Every plan’s EFL is different.
In a Texas summer you may sail past 1,000 kWh. In October, March or April, plenty of homes drop below it. Those are the months bill credit plans quietly get expensive.
Who bill credit plans can work for
They aren’t automatically bad. If your usage is consistently inside the credit window all year, a bill credit plan can be one of the cheapest options available. The problem is that very few households are that consistent, and almost nobody checks before signing.
Why these plans are so common
Price comparison sites sort plans by the average price at a single usage level. Bill credits are a simple way for a plan to rank at the top of that list. That’s not illegal, and it’s all disclosed in the EFL, but it rewards the plans that are best at one number rather than best across a full year.
How to avoid getting caught
- Pull your last 12 months of usage. Your provider’s online account or Smart Meter Texas has it.
- Check the plan’s EFL for credits, tiers and minimum-usage fees.
- Estimate the yearly cost, month by month, using your real usage.
- Compare that yearly total across plans, not the headline rate.
Or skip the spreadsheet. This is exactly what Watt Panda does for you, using your actual bills. See 5 more red flags to watch for while you’re at it.
Helpful official resources: Power to Choose (official PUCT site) · Smart Meter Texas
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Frequently asked questions
Is a 9.7¢/kWh electricity plan a scam?
No. The price is real at the usage level shown, and the terms are disclosed on the EFL. It just may not be the price you’ll actually pay in most months.
How do I know if my plan has a bill credit?
Look at your EFL for terms like “bill credit,” “usage credit,” or a credit tied to a kWh range. Your monthly bill will also show the credit as a line item in months you qualify.
What’s a better alternative to a bill credit plan?
For most homes, a simple fixed-rate plan with a low base charge and no usage-based credits gives more predictable bills. The right choice depends on your usage pattern, which is why we start with your bills.
Very useful, thank you.